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Home-builder confidence highest in almost nine years


MARKETWATCH 10:45 AM ET 09/17/14

WASHINGTON (MarketWatch) -- A gauge of confidence among home builders rose in September to the highest level in almost nine years, as builders' views on present and coming sales rose, according to data released Wednesday.

The overall gauge of builder sentiment rose 4 points to 59 in September, the National Association of Home Builders/ Wells Fargo said. Readings above 50 signal that builders, generally, are optimistic about sales trends, and September marks the third consecutive month of above-50 readings.

A strengthening jobs market is perking up builders, though there are still major headwinds from strict credit standards, among other factors.

Confidence among home builders is running higher than levels historically seen at recent building rates for new homes. On Thursday, the government will report on new home construction, and expect to find out that the pace slowed down in August.

Economists are forecasting faster sales and construction of new homes as the economy adds jobs at a healthy rate. Also, mortgage rates remain relatively low, making financing relatively affordable. However, not all borrowers are able to take advantage of cheap mortgages. Years after the financial meltdown lenders' loan standards are still so high that some creditworthy borrowers haven't been able to get a mortgage. Also, quickly rising house prices over the past year narrowed the pool of borrowers who can afford a new home.

Data details from Wednesday's report showed that NAHB's gauge of builders' views on coming sales of single-family homes rose 2 points to 67 in September, while a barometer of builders' views on present sales rose 5 points to 63, and a gauge of prospective-buyer traffic increased 5 points to 47.

"The data continue to suggest that the housing recovery is back on track," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

The most recent report from the government on new single-family homes showed that the sales pace fell to a four-month low in July. However, that data series is volatile, and sales could bounce higher in coming reports.

-Ruth Mantell; 415-439-6400; [e-mail]

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09-17-141045ET
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