Builder Confidence Edges Up Again in August

By Mark Lieberman

Managing Director and Senior Economist

Data Highlights:

  • Housing Market Index ROSE one point in August to 66 (out of 100);
  • Two of the three index components – outlook for current sales and buyer traffic — IMPROVED by two points each;
  • The outlook for sales six months out FELL 1 point;
  • The outlook for current sales was revised down one point for July;
  • The total index remained down year-year
  • By region, builder confidence ROSE in the Northeast, Midwest, and West and was unchanged in the South.


  • The overall Index was down year-year for the tenth straight month
  • The measure of buyer traffic rose to 50, its highest level since October 2018;

Data Source: National Association of Home Builders

Image result for builder confidence

Despite weakness in new home sales and new residential permits and starts, builders remain confident about residential housing markets.

At least that’s what they’re telling the National Association of Home Builders in its monthly three question survey which checks views about the current sales market for new homes, views of the market six months out and the flow of buyer traffic to model homes.

Builder sentiment continues to outpace the reality of weak new home sales, improving again in July although new home sales for May (the last reporting month) fell and new home sales sit at their lowest point of the year.

The builders may be encouraged by continued low mortgage rates as reported by Freddie Mac in its weekly survey. The average rate on a 30-year fixed rate loan, Freddie Mac reported, was 3.60 percent, a drop of 1.34 percentage points since last November. That would reduce the monthly payment on a $300,000 mortgage to $1,363.94 from $1,599.48, savings of $235 per month.

Or, perhaps builders found encouragement in the monthly Employment Situation report for July which reported an increase of 7,000 residential construction jobs in July to the highest level since November 2007, just before the onset of the Great Recession.  

They certainly weren’t responding to the most recent report on new home sales: a seasonally adjusted annualized rate of 646,000, barely ahead of the 644,000 in January. The same report noted the median price of a new home was $310,400 essentially unchanged for $310,500 one year earlier.

New building activity too has slowed. According to government data, new housing permits are down 6.6 percent from a year ago and new housing starts while up from year-earlier levels, have relied on multi-family starts which are up almost 25 percent over the last year.

Hear Mark Lieberman every Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 am Eastern Time. Follow Mark Lieberman on Twitter at @ foxeconomics.

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