Houston Builder Confidence up to 5 Year High

Builder Confidence Blooms To Five-Year High

Confidence among home builders shot up to a five-year high in August, due in part to a burgeoning recovery in property values across the nation. The nation’s home builders reported current prospective sales conditions as the best they been since the housing market crashed. The builder confidence index inched up two points in August to 37, up from 35 in July, making this the fourth consecutive increase and the highest reading since February 2007. The turnaround in home prices, which saw a more than 2 percent increase last month, has ignited hopes that the housing market is finally turning around. Falling prices weigh on consumer confidence and by transmission builder confidence. The recent direction of home prices is an important turning point. It's bringing back the consumer who feared if they purchased a home, it would fall in value. Construction of new homes slowed slightly in July to an annual rate of 746,000, down 1.1% from the June rate of 754,000, which was a seven-year high. While the starts figures reveal continued caution against establishing too much inventory, building permits increased 6.8% across all market segments. Single-family permits rose 4.5% and multi-family permits were up 11.2%, the highest in four years. The decline in single-family starts is more likely an adjustment to a very healthy June rate than it is a sign that the budding housing revival is in trouble. A very slight rise in the month’s supply of new homes in June, continued difficult in obtaining production credit and extreme weather are likely the primary causes for the momentary pause in single-family starts. Economists expect to see some continued modest improvement in both builder confidence and housing starts. Forecasts predict the annual rate of housing starts in the third quarter to be 765,000 or about a 15% increase over the third quarter of 2011.