Homebuilder confidence in the U.S. increased for the fifth consecutive month in September, according to a report released by the National Association of Home Builders on Tuesday, with the index of homebuilder confidence rising to its highest level in over six years.
The report showed that the NAHB/Wells Fargo Housing Market Index rose to 40 in September from 37 in August. Economists had been expecting the index to show a more modest increase to a reading of 38.
With the much bigger than expected increase, the index rose to its highest level since coming in at 42 in June of 2006.
NAHB Chairman Barry Rutenberg said, "This fifth consecutive month of improvement in builder confidence provides further assurance that the housing market is moving in a positive direction, but there's still a long way to go on the road to recovery and several obstacles are slowing our progress."
"In particular, unnecessarily tight credit conditions are preventing many builders from putting crews back to work - which would create needed jobs -- and discouraging consumers from pursuing a new-home purchase," he added.
The continued increase by the housing market index reflected increases by all three components that make up the index.
While the component gauging current sales conditions rose to 42 in September from 38 in August, the component gauging sales prospects in the next six months jumped to 51 from 43. The component measuring traffic of prospective buyers edged up by one point to 31.
The NAHB noted that builder confidence also rose across every region of the country in September. The index measuring homebuilder confidence in the Northeast showed a notable increase, surging up to 32 in September from 23 in August.
The indexes measuring homebuilder confidence in the Midwest and the South both rose by four points to 45 and 39, respectively, while the index for the West climbed to 45 from 40.
NAHB Chief Economist David Crowe said, "Builders across the country are expressing a more positive outlook on current sales conditions, future sales prospects and the amount of consumer traffic they are seeing through model homes than they have in more than five years."
"However, against the improving demand for new homes, concerns are now rising about the lack of building lots in certain markets and the rising cost of building materials. Given the fragile nature of the housing and economic recovery, these are significant red flags," he added.
Additional housing data is due to be released on Wednesday, with the Commerce Department scheduled to release its report on new residential construction and the National Association of Realtors due to release its report on existing home sales.
by RTT Staff Writer
For comments and feedback: firstname.lastname@example.org
What parts of the world are seeing the best (and worst) economic performances lately? Click here to check out our Econ Scorecard and find out! See up-to-the-moment rankings for the best and worst performers in GDP, unemployment rate, inflation and much more.