National Association of Home Builders (NAHB) reported Thursday that its
Housing Market Index rose three points to a reading of 59 for August.
Confidence among builders is likely growing in connection with
stronger housing markets and high demand for homes. These conditions are
being driven by short supplies of homes for sale in many markets.
Builder confidence in current market conditions rose by three points
to a reading of 62, while builder confidence in market conditions within
the next six months rose by one point to a reading of 68. Confidence in
buyer foot traffic was unchanged from Julyâ€™s reading of 45.
Readings above 50 indicate that more builders surveyed view housing
market conditions as positive rather than negative; there was some
concern that the high buildersâ€™ confidence reading could trigger the Fed
to announce the tapering of its $85 billion monthly purchase of
Treasury securities and mortgage-backed securities.
Housing Starts Driven By Apartment Construction
Housing starts rose in July, but were led by the volatile apartment sector rather than single- family homes.
On Friday, the U.S. Department of Commerce reported 896,000 housing
starts on a seasonally adjusted annual basis. This reading fell short of
expectations of 915,000 housing starts, but exceeded Juneâ€™s reading of
846,000 housing starts.
Starts for residential buildings with five or more units rose by
20.90 percent year-over-year while construction of one of one-to-four
family residential buildings fell by 2.20 percent. Demand for rental
properties and a shortage of available single family homes was seen by
economists as contributing to increasing multi-family housing
Analysts said that some home builders may be holding back on
single-family home construction due to increasing materials and labor
costs, but this doesnâ€™t reflect the record level of builder confidence
reported in the NAHB Housing Market Index.
Building homes at less than optimum capacity isnâ€™t good news for the
shortage of available single-family homes. Rising mortgage rates are
also a concern for home builders, as fewer borrowers may be able to
qualify for mortgage loans needed for financing home purchases.
Building permits numbers were also released on Friday, and presented a
more positive picture than housing starts. Julyâ€™s reading for building
permits issued rose by 2.70 percent in July to an annual reading of
943,000 permits against expectations of 953,000 permits issued and
exceeded Juneâ€™s reading of 918,000.
Building permits issued provide an indication of future housing starts.
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