Homebuilder Confidence on the Rise After the First Six Months of 2014

homebuilder confidenceA major measure of homebuilder confidence shows increased consumer optimism among first-time homeowners and residential home builders in the United States in the latter part of 2014.

In July, the National Association of Home Builders/Wells Fargo sentiment measure — a leading indicator of homebuilder confidence — rose almost 10 percent, to 53 from June’s 49, according to Bloomberg. This increase beat Bloomberg’s forecasts of 50 for the month.

When the sentiment measure is above 50, it means that more respondents indicated homebuilding conditions were good.

Increased homebuilder confidence is being attributed to recent signs of improvement in the housing market, such as an improved U.S. labor market and overall boosts in U.S. consumer sentiment. Unemployment has dropped to 6.1 percent, an almost six-year low, while payrolls increased from 224,000 to 288,000.

Recovery from a harsh winter season that slowed home construction has also influenced the increases in homebuilder confidence.

Declines in mortgage rates are also considered a contributor to the improved homebuilder confidence measure. National mortgage organization Freddie Mac stated that the July average rate for 30-year fixed-rate mortgage was 4.15 percent, in contrast to the 4.53 percent rate in January.

Homebuilder confidence increased throughout all four major United States regions. In the west, confidence measures rose more than 10 percent, from 53 to 59. Midwest confidence measures jumped from 47 to 53 in the period between June and July. The northeast region saw a confidence measure gain of 37 from 34, while the south increased slightly from 52 to 53.

For 25 years, Construction Monitor has served the construction industry with detailed building permit data showing construction starts. Contact us today for more information on current trends in homebuilder confidence and what recent improvements mean for construction professionals.

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