The National Association of Home Builders (NAHB) and Wells Fargo reported that the Housing Market Index (HMI) was unchanged at 72 in February. The headline measure remained not far from December’s reading, which was the best since July 1999. More importantly, homebuilders are very optimistic about the next six months, with the index for expected sales of single-family homes rising from 78 to 80, its best reading since June 2005. NAHB Chief Economist Robert Dietz added, “With ongoing job creation, increasing owner-occupied household formation, and a tight supply of existing home inventory, the single-family housing sector should continue to strengthen at a gradual but consistent pace.” The release cited the “pro-business political climate” for the recent uptick in sentiment, but also cautions about supply constraints, including “shortages of labor and building material price increases.”
To put the current numbers in perspective, the HMI stood at 58 and 65 in February 2016 and February 2017, respectively. Readings over 50 suggest that more homebuilders are positive than negative in their economic outlook. The HMI has exceeded 50 in every month since July 2014, and it has exceeded 60—which would signify robust growth—for 18 straight months. In February, sentiment strengthened in the Midwest but was somewhat softer (but still quite positive) in the Northeast and West.