Builder Confidence Jumps in November to Eight-month High

By Mark Lieberman

Managing Director and Senior Economist

Highlights:

  • Housing Market Index IMPROVED two points in November to 70, its highest level since March;
  • Two of the three index components rose; only the outlook for sales six months out slipped, dropping one point to 77;
  • By region, builder confidence ROSE 25 points in the Northeast to 63, its highest level since October 2005; the index also ROSE in the in the South and West and was unchanged in the Midwest.

Image result for home building

Even without a boost from the storm ravaged South, builder confidence jumped again in November to its second highest level since 2005, the National Association of Home Builders (NAHB)  reported Thursday.

The storms which ravaged Houston and parts of Louisiana as well as Florida appeared to have little impact on the outlook as the confidence improvement was driven by a sharp jump in the Northeast.

The improvement in the index, according to the NAHB, was driven by an increase in demand for new homes. New home sales surged in September according to the latest data from the Census Bureau to the highest level since October 2007.

Builders can expect yet another bump in activity as rebuilding picks up in Florida and Texas in the wake of Harvey and Irma.

Those storms are expected to cause higher prices for both building supplies and labor which would, in turn, drive up the price of a new single-family home. The median price of a new single-family home for the first nine months of this year was $314,656, up 2.5 percent over the same period last year

Two of the three index component improved in the survey, conducted in the first ten days of November. Only the outlook for sales six months forward slipped and that by one point to 77, still a strong reading. The index tracks the outlook for sales in the current month and six months forward as well as buyer traffic. Buyer traffic is the only one of the measures with an index level below 50. According to the NAHB, any number over 50 indicates that more builders view conditions as good than poor.

The index measure for buyer traffic improved to 50 in November.

The Census Bureau and Department of Housing and Urban Development will report tomorrow on new housing permits and starts albeit for October.

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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