US homebuilder confidence climbs in July for 3rd month

16 July 2013 16:18  [Source: ICIS news]

US homebuilder confidence climbs in July for 3rd monthWASHINGTON (ICIS)--US homebuilders’ confidence in the housing market rose by six points in July, a survey report showed on Tuesday, marking the third straight monthly gain and the highest level in seven years.

In its monthly survey of housing contractors, the National Association of Homebuilders (NAHB) said that its members reported increasing confidence in the market for newly built single-family homes.

While the market for new housing also includes apartment buildings and condominiums, the construction and sale of one-family homes is considered the core of the industry.

NAHB said that its housing market index (HMI) for this month rose to 57 from the 51 reading in June.

It is the highest reading since January 2006 when the index was already in free-fall as the US housing bubble collapsed.

The June measure of 51 and the July reading of 57 also mark the first time that the index has been in positive territory since early 2006.

The HMI is a compilation of three subsidiary measures: home builders’ current sales of single-family homes, the number of prospective home buyers visiting model homes and contractors’ expectations for home sales over the next six months.

On the 1-100 HMI scale, a reading of 50 or above indicates that home builders are confident about their prospects over the next six months.

During the US housing boom years of 2002-2005, the index had held steady in the mid-60s and even topped 70 at times.

At the bottom of the US 2008-2009 recession, the HMI hit an all-time low of 8 in January 2009.

After bouncing around in the middle teens for the rest of 2009 and through most of 2010 and 2011, the HMI measure of builder confidence began an apparent recovery in early 2012 but then seemed to peak at 47 in December-January, dipped to 41 in April this year and then turned up again in May.

NAHB said that builder confidence is now widespread.

“Today’s report is particularly encouraging in that it shows improvement in builder confidence across every region,” said NAHB chairman Rick Judson. 

He noted that there were gains in each of the three HMI subsidiary measures, current sales, home shopper traffic and builders’ expectations for sales.

NAHB chief economist David Crowe said that housing contractors “are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten”.

Another factor feeding contractors’ confidence, said Crowe, is moderating pricing for raw materials.

“As the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften,” he said.

The housing market is a key downstream consumer industry for a wide variety of chemicals, resins and derivative products involved in home construction and as components in equipment and furnishings that go into new homes.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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