Confidence Among U.S. Homebuilders Improved in August on Sales

Confidence among U.S. homebuilders climbed in August as steady job growth and low interest rates boosted prospects for the residential real-estate market in the second half of the year, according to data Monday from the National Association of Home Builders/Wells Fargo.

Key Points

  • Builder sentiment gauge rose to 60 from revised 58
  • Readings greater than 50 indicate more respondents reported good market conditions and the August figure matched the median forecast
  • Measure of six-month sales outlook rose to 67 from 66, while index of current sales climbed 2 points to 65
  • Gauge of prospective buyer traffic eased to 44 from 45

Big Picture

The NAHB index has held within a narrow three-point range this year, signaling builders are generally positive about the outlook although there has been little additional momentum to propel sentiment to a higher level. Demand for properties remains elevated as borrowing costs stay low and employers retain workers, hire and slowly lift wages. The index reached an all-time low of 8 in January 2009 and a high of 78 in 1998.

Economist Takeaways

“Builder confidence remains solid in the aftermath of weak GDP reports that were offset by positive job growth in July,” NAHB chief economist Robert Dietz said in a statement. “Historically low mortgage rates, increased household formations and a firming labor market will help keep housing on an upward path during the rest of the year.”

The Details

  • Confidence improved in the South and Northeast
  • Sentiment dropped in the Midwest to its weakest since May 2015, and eased in the West
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