Housing Market Index (HMI): Homebuilder Confidence Highest Since May

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) showed homebuilder confidence rose to the highest level since May. The HMI rose 4 points to 68 in October, indicating homebuilder confidence rebounded quicker-than-expected.

The median economic forecast called for a reading of 64.

“This month’s report shows that home builders are rebounding from the initial shock of the hurricanes,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”

All 3 components in the HMI posted increased in October, with the component gauging current sales conditions rising 5 points to 75. The index tracking sales expectations in the next 6 months also increased five points, up from 73 to 78. Finally, the component gauging buyer traffic ticked up slightly by 1 point to 48.

“It is encouraging to see builder confidence return to the high 60s levels we saw in the spring and summer,” said NAHB Chief Economist Robert Dietz. “With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market continue to strengthen at a modest rate in the months ahead.”

The 3-month moving averages for regional HMI scores showed the South increasing 2 points to 68 and the Northeast by 1 point to 50. Both the West and Midwest remained unchanged at 77 and 63, respectively.