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Builder Confidence Recovers

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After plunging last month, the level of confidence among the country’s residential home builders this month more than made up the ground it lost.

During September, the Housing Market Index — a gauge of single-family builders’ perception of the market for new homes — tumbled three points.

At issue last month were the recent hurricanes, which raised concerns among home builders about the availability of labor and the cost of building materials.

But in the October report from the National Association of Home Builders and Wells Fargo, the index ascended four points to
68 — more than making up the ground it lost last month.

“This month’s report shows that home builders are rebounding from the initial shock of the hurricanes,” NAHB Chairman Granger MacDonald said in the report. “However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”

Compared to the same months last year, the index has increased five points.

The HMI is comprised of three components. The component measuring buyer traffic was up just a point from a month earlier to 48. An index of less than 50 is an indication that more builders view conditions as bad than good.

But the index gauging current sales conditions jumped five points to 75, while the index representing sales expectation also increased five points to 78.

On a regional level, the overall three-month moving average in the South was up two points to 68.
In the Northeast, the index climbed a point to 50.

No month-over-month change left the index in the West at 77 and the index in the Midwest at 63.

NAHB Chief Economist Robert Dietz said in the report that the tight inventory of existing homes, in addition to
promising growth in household formation, is expected to strengthen the new home market in the near future.

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