The level of builder confidence improved in November, as real estate records showed improving housing conditions, according to a report from the National Association of Home Builders.
Overall confidence jumped to 46 this month, which was five points higher than October's level. The level was the highest recorded in six years, as well as the seventh month in a row where there was a gain from the previous period, the industry group's Housing Market Index noted.
"Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country," said Barry Rutenberg, chairman of the NAHB. "In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today’s favorable prices and interest rates."
David Crowe, chief economist for the NAHB, explained that the figure is significantly higher than one year earlier, when the Index was only 19. It is approaching the threshold of 50, which shows that there is as many builders who think conditions are good as those who think it is poor.
Index components show stark improvements
The overall index had a significant gain during the month, as did the specific components. Sales expectations, which examines how the market will look over the next six months, rose to 53 from the previous figure of 51, the report showed. This was the third month in a row where the figure remained at 50 or higher. The current sales conditions had a gain of eight points during November, as it rose to 49. This was the highest level recorded since 2006.
Only the traffic of prospective buyers measurement did not increase, as it remained at 35 in November. Despite the stagnation, the level is only one month removed from a gain of five points.
While many industry members are confident of market improvement, the sentiment was shared by consumers, when it comes to the economy. A report from The Conference Board showed consumer confidence rose significantly during October.
The Consumer Confidence Index jumped to 72.2 during the month, which was close to four points higher than the previous month's figure. Additionally, both the Present Situation Index and the Expectations Index increased that month.