Builder Confidence Index Rises in September to 6-Yr. High, With Largest 12-Month Gain in History

From today’s report from the National Association of Home Builders:

September 18, 2012 – Builder confidence in the market for newly built, single-family homes rose for a fifth consecutive month in September to a level of 40 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).  This latest three-point gain brings the index to its highest reading since June of 2006 (see chart above).

“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,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “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.”

“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,” noted NAHB Chief Economist David Crowe. “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.”

MP: The increase in the builder confidence index in September to a six-year high of 40 is a remarkable recovery from a reading of only 14 a year ago.  The 24-point improvement in builder confidence over the last year is the largest 12-month gain in the history of the HMI going back to 1985, and surpasses the previous record of a 24-point annual gain in early 1992.