The National Association of Home Builders (NAHB) and Wells Fargo reported that the Housing Market Index (HMI) edged higher, up from a revised 45 in November to 47 in December. A reading of 50 would indicate that there were an equal number of builders who were positive and negative in their outlook, so this indicates – much as it did last month – that housing contractors that have almost become net positive in their attitudes. This is a tremendous improvement from even a few months ago, as it was almost half this level (24) just eight months ago in April.
Looking at specific regions, there was continued progress in December in the Northeast and Midwest, with a slight downtick in the South and West. All regions have seen steady progress, though, over the past few months. Nationally, single-family sales volume increased from 49 to 51 in the month (up from 41 in October). The traffic of potential buyers was also higher.
NAHB Chief Economist David Crowe said, “While there is still much room for improvement, the consistent upward trend in builder confidence over the past year is indicative of the gradual recovery that has been taking place in housing markets nationwide and that we expect to continue in 2013.” At the same time, tougher lending standards and still-weak financial conditions continue to hold back faster growth.
Tomorrow, the Census Bureau releases new housing starts and permits data. Last month, housing starts rose to 894,000, and they have risen almost 42 percent year-over-year. While the consensus estimate for new residential construction is for 875,000 units, overall housing data continue to reflect a longer-term upward trend.
Chad Moutray is chief economist, National Association of Manufacturers.