US housing starts unchanged in July at 581,000 pace
U.S. home builders were more confident in August than at any time in the past year, but most of them still think the market is poor, according to the housing market index released Monday by the National Association of Home Builders and Wells Fargo.
The home builders’ index climbed to 18 in August from 17 in July. It’s the highest since June 2008. The index has risen in five of the past seven months since hitting a record-low 8 in January.
At 18, the index shows that less than one in five builders thinks the housing market is good.
Economists surveyed by MarketWatch were looking for the index to rise to 19 in August. See Economic Calendar.
Over time, the builders’ index is highly correlated with the government’s data on single-family building permits. The Commerce Department will report on housing starts and building permits for July on Tuesday, with economists calling for about a 3% increase in housing starts to a seasonally adjusted annual rate of 596,000 from 582,000 in June.
Builders were more optimistic about the future in August, while their attitudes about current conditions were unchanged.
“There is definitely a sense of hope among builders that the worst of the downturn is over and that a turning point is near at hand,” said NAHB chief economist David Crowe.
Two of the three components of the index improved in August. Expectations about sales over the next six months rose from 26 to 30, the highest since April 2008. The index for buyers’ traffic increased from 13 to 16, the highest since June 2008. The index for current sales was unchanged at 16.
The builders’ trade group, like the real estate agents, has been complaining that stricter appraisal guidelines are “scuttling a quarter of all new-home sales.” They urged Congress to change the appraisal guidelines, and to renew a subsidy for buying a home and to expand it to cover all buyers, not just first-time buyers.
The first-time buyers’ credit of up to $8,000 expires on Dec. 1.
Source: Market Watch