Homebuilders gauge at five-month high shows storm recovery
A rebound in homebuilders' confidence to a five-month high indicates concern over fallout from major hurricanes has been alleviated, according to data Tuesday from the National Association of Home Builders/Wells Fargo.
The Housing Market Index rose to 68 (the estimate was 64) from an unrevised 64 in September. The measure of the six-month sales outlook rose 5 points to 78, matching the highest level since 2005. The current sales index increased to 75 from 70.
The report suggests the housing market is on track to return to its prestorm state, marked by steady demand and rising prices that are nevertheless putting purchases out of reach for some first-time buyers.
Developers will probably get a boost from recovery efforts in the coming months as rebuilding efforts intensify in Texas and Florida, where many homes were flooded or destroyed. At the same time, the continued strength of the U.S. job market and still-low mortgage rates point to underlying support for residential real estate.
"With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market continue to strengthen at a modest rate in the months ahead," Robert Dietz, chief economist at NAHB, said in a statement.
"Builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages," NAHB Chairman Granger MacDonald, a homebuilder and developer from Kerrville, Texas, said in a statement.
The gauge of prospective buyer traffic rose to 48 from 47, the first increase since the March index of confidence rose in the Midwest and South, unchanged in the Northeast and fell in the West. Readings greater than 50 indicate more respondents reported good market conditions.