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Another Massive Jump in Builder Confidence
Thursday, July 16, 2020
Economists talk about the potential for a V shaped recovery from the pandemic
and that is exactly the pattern displayed by the National Association of Home
Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The HMI, a measure of
builder confidence in the market for newly constructed homes, rose 14 points
this month, completing the upward leg of the V and returning to its
pre-pandemic March reading of 72. The index had plummeted 42 points in April
before staging a three-month comeback. Derived from a monthly survey that NAHB has been conducting for 30 years,
the HMI gauges builder perceptions of current single-family home sales and
sales expectations for the next six months as "good," "fair" or "poor." The
survey also asks builders to rate traffic of prospective buyers as "high to
very high," "average" or "low to very low." Scores for each component are then
used to calculate a seasonally adjusted index where any number over 50
indicates that more builders view conditions as good than poor.
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