WASHINGTON (11/19/14)--Homebuilder sentiment outperformed analyst expectations in November, as the National Association of Home Builders composite index climbed four points to 58 for the month, almost completely reversing October's five-point step back (Economy.com Nov. 18).
November's surge in homebuilder confidence pushes the index near its highest point in nine years.
"Though most, including Moody's analytics, thought homebuilder sentiment would improve, Tuesday's four-point increase surpassed even the most optimistic views," said Gregory Bird, Moody's analyst (Economy.com).
"Although homebuilders are still not as exuberant as they were during the housing bubble, they are getting close, as the index averaged 66 between the years of 2003 and 2005."
Confidence swelled both regionally and across all subcomponents of the index, including for current single-family sales; for the outlook for the housing market over the next six months; and for the traffic of potential homebuyers.
While most builders continue to rate prospective buyers as "low to very low," the subcomponent's number is improving.
By region, the Northeast watched homebuilder sentiment climb 12 points to 51 from 39. The Northeast was the last region to rate conditions as favorable rather than poor.
The West also witnessed a substantial seven-point gain, and the Midwest and South continued to post modest gains.
Southern builders continue to be the most optimistic of the four regions, according to Moody's, and nationwide, analysts believe future months could be promising for homebuilders.
"Historically low borrowing costs in conjunction with the release of pent-up household formation also bodes well for the outlook," Bird said. "Downside risks still loom, such as rising interest rates stifling demand, especially among first-time homebuyers."