A gauge of home-builder sentiment this month rose to its highest level since November 2005, which is a sign of the US housing market is improving despite shaking global economy and volatile financial markets.
The National Association Of Home Builders (NAHB)/Wells Fargo builder sentiment index released Wednesday rose this month to 62, up from 61 in August. The last time when the level reached this high was in October 2005 where the index was at 68.
As per experts, reading above 50 indicates the builder view sales conditions as good, rather than poor. The index has been consistently above 50 since July in the previous year, which showed a gradual bounce back in sales of new homes.
Economists had estimated that the index had no change from the prior months and maintained to remain at 61, a nine year high. They said if all went well they housing market will keep moving forward at a steady and a modest rate through the end of the year.
The NAHB said today that builder confidence is one the steady rise for the market of newly constructed single family residential homes. Single family housing starts rose an impressive 12.8% in July from June, according to the US Census.
The results of the NAHB Housing Market Index are based on three distinct questions to homebuilder trade group members. The premium for new construction compared to existing homes is now wider than usual.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a client note, said, "It is possible that the stock market hit has been delayed, but equally it could be swamped by the rapidly-improving cash flow of would-be home buyers, whose numbers are swelling as payrolls continue to rise".