HMI Subindexes All Post Record Highs, Economic Indicators Suggest Historic Housing Boom
Washington, D.C. (PPD) — The NAHB Housing Market Index (HMI) reported builder confidence unexpectedly rose another 5 points to 83 in September, smashing the all-time high and beating the consensus forecast. A reading above 50 indicates a positive housing market for new single-family dwellings.
Forecasts ranged from a low 75 to a high of 81. The consensus forecast was 78, indicating the surge was far stronger than economists expected. The HMI now stands at its highest reading in the 35-year history of the series, matching the record that set back in December 1998.
“Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber,” said NAHB Chairman Chuck Fowke. “More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.”
The HMI started 2020 at a 20-year high. In January, builder confidence in the market for newly-built single-family homes edged just one point lower to 75 from December 2019. The two monthly readings had marked the highest sentiment levels since July of 1999.
The NAHB/Wells Fargo HMI is derived from a monthly survey that NAHB has been conducting for 30 years. It measures builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.”
Each of the HMI subindices posted all-time record high readings in September. The HMI index for current sales conditions rose four points to 88. The index for sales expectations in the next six months gained six points to 84 and the measure charting traffic of prospective buyers saw a nine-point gain to 73.
Regional HMI 3-Month Averages
The three-month moving averages for regional HMI scores show Northeast gained 11 points to 76, the Midwest rose nine points to 72, the South gained 8 points to 79 and the West rose seven points to 85.
Housing Primed to Lead Economic Recovery
As People’s Pundit Daily (PPD) recently reported, indicators widely show the U.S. housing market is “booming”, surpassing pre-pandemic levels and expectations. Experts now foresee housing leading the economic recovery and have raised growth forecasts for the sector.
The National Association of Realtors (NAR) reported existing home sales posted another record gain in July. The key housing market indicator rose 24.7% to a seasonally-adjusted annual rate of 5.86 million, surpassing the previous record set in June.
The Pending Home Sales Index (PHSI) surged more than three times the consensus forecast by 16.6% in June, after soaring a record 44.3% in May. The PHSI rose another 5.9% in July.
New residential construction statistics for housing starts and building permits skyrocketed in July, despite lingering effects due to coronavirus (COVID-19). The former gained 22.6% (±14.7%) and the latter 18.8% (±1.1%), respectively.
The report for August is scheduled to be released on Thursday.
New home sales soared 13.8% (±17.8%) to a seasonally adjusted annual rate of 776,000 in June, easily beating the consensus forecast. That’s the highest level for new home sales since before the Great Recession, or July 2007.