The National Association of Home Builders released new confidence numbers on October 16. The NAHB/Wells Fargo Housing Market Index ticked up one point to land at 41, its strongest level since June 2006. This marks the sixth consecutive month that the index has increased. The SPDR S&P Homebuilders (NYSEARCA:XHB) ETF has ticked up half a percent in afternoon trading.
Lowe’s (NYSE:LOW) settled in afternoon trading after hitting a 52-week high of $32.63 on the news. The company has been edging upwards since a slump at the beginning of August. Home Depot (NYSE:HD) is trading about $3 shy of 52-week highs and remains essentially flat after fluctuations early in the day. Williams-Sonoma (NYSE:WSM) has pushed about two percent higher, also setting a new 52-week high.
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“Many builders are reporting increases in the number of serious buyers visiting their sales offices and the overall confidence measure is much higher than it was at this time last year,” noted NAHB chairman Barry Rutenberg in the release. “The concern is that, even though demand for new homes is rising, overly tight credit conditions are still constraining new building and new purchases at a time when that kind of economic activity and the job growth it generates are greatly needed.”
NAHB chief economist David Crowe says that: “The slight gain in builder confidence this month is an indication that, while still moving forward, the speed at which the housing recovery is proceeding is being moderated by the various constraints such as tight credit, difficult appraisals and more recently, the limited inventory of buildable lots in certain markets.”
The Housing Market Index is derived from a monthly survey of builder perception. Any number above 50 indicates that more home builders view sales conditions as good than poor. The HMI remains the strongest in the Midwest and West, at 42 and 44 respectively, and the weakest is in the Northeast, at 29.