MARKET RECAP

Home builders are portending better days ahead. Their sentiment continues to reflect more optimism and improving new-home prospects.

For proof, the NAHB/Wells Fargo Home Builder Sentiment Index gained four points in February, pushing the index to a 29 reading – the highest reading in over four years. What’s more, February was the second-consecutive month of a four-point gain and the fifth-consecutive month-over-month gain.

Even more encouraging is the fact that home builder optimism isn’t confined to specific index components or specific areas. Gains are evenly split among current sales, future sales, and buyer traffic, and evenly distributed by metropolitan region.

The latest data makes the case for a rosier housing outlook. In fact, the Commerce Department data show housing starts increased 1.5% in January, pushing starts up to 699,000 annualized units, the highest start rate since October 2008.

Many housing pundits have pointed to multifamily starts as reason for the upturn. To be sure, multifamily starts are in an uptrend, having increased 14% to an annualized rate of 175,000 units in January. It’s worth noting, though, that single-family starts posted at 508,000 annualized units in January. That’s a 1 percent drop from December’s starts, but December’s single-family starts were revised up strongly to 513,000 homes – a 12-percent gain from November.

In short, the resurgence in home construction isn’t being driven by renters alone. People still want to own a home, and they are still willing to buy a new one.

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