US home builder confidence rises for fourth consecutive month

15 August 2013 17:03  [Source: ICIS news]

WASHINGTON (ICIS)--Market confidence among US home builders rose in August for the fourth straight month, a key survey reported on Thursday, with a positive market outlook among contractors reaching its highest level in eight years.

In its monthly survey of housing contractors, the National Association of Home Builders (NAHB) said that its housing market index (HMI) rose three points this month to 59 from its 56 reading in July.

NAHB chairman Rick Judson said that “builders are seeing more motivated buyers walk through their doors than they have in quite some time”.

In addition, he said, “firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market” to buy a home.

However, NAHB chief economist David Crowe noted that while builder confidence has seen steady improvement since a recent dip to an index level of 41 in April this year, the housing market is still constrained.

“This positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labour,” Crowe said.

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.

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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