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Home-Builder Optimism Hits 6-Year High

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By Steve Goldstein

(MCT)—Optimism among the nation’s home builders climbed in September for the fifth straight month to reach the highest level in more than six years, according to a closely followed index released Tuesday.

The National Association of Home Builders housing market index gained three points to a seasonally adjusted reading of 40, the highest the index has been since June 2006. Economists polled by MarketWatch had anticipated a reading of 38.

The index still isn’t at the 50 level, indicating “good” conditions, but has climbed back from as low as eight during the recession. The index didn’t even break 20 until December 2011.

“The traffic through the model homes is increasing, but it’s also the quality of the traffic that is increasing. We’re moving from window shoppers to people who are real buyers, people who are ready to put down a deposit,” said NAHB senior economist Robert Denk to MarketWatch Radio.

Gains were made in all regions and in each of the index’s three components. The present sales component rose four points to 42, sales for the next six months jumped eight points to 51, while traffic of prospective buyers edged up one point to 31.

Though the index historically tracks closely with single-family housing starts, the recovery in optimism has outpaced the hard data. In July, single-family starts reached a seasonally adjusted annual rate of 502,000, a gain of 42 percent from March 2009 lows. The Commerce Department reports August housing starts data on Wednesday.

Goldman Sachs, ahead of the data, upgraded its rating on the shares of several builders and said it expects growth in housing activity in a range of 20 percent to 30 percent for each of the next few years.

Also Tuesday, Ryland Group, a builder based in Southern California, reported that orders for July and August climbed 62 percent compared to the same two months of 2011.

©2012 MarketWatch
Distributed by MCT Information Services

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