WASHINGTON (MarketWatch) — A gauge of confidence among home builders rebounded this month, led by more optimism over present and upcoming sales of single-family homes, according to data released Tuesday.
The National Association of Home Builders/Wells Fargo gauge rose four points to 58 in November, near the highest level in nine years. Readings above 50 signal that builders, generally, are optimistic about sales trends. November marks the fifth consecutive month of above-50 readings.
“Growing confidence among consumers is what’s fueling this optimism among builders,” said Kevin Kelly, a home builder and NAHB’s chairman.
Economists polled by MarketWatch had expected the gauge to rise to 56 in November from 54 in October. The gauge had dropped in October from a nine-year high hit in September.
A strengthening jobs market has been perking up builders. However, there’s also been weak wage growth for American workers, a factor that could be holding back a wider economic recovery, including the housing market’s rebound.
Overly restrictive access to mortgages has also curbed home sales, economists say. Young families and other first-time buyers are having a particularly tough time putting together enough cash for a down payment and proving to lenders that they are creditworthy.
The country’s No. 1 home builder, D.R. Horton DHI, +1.73% is trying to lure more entry-level buyers, a strategy that could grow unit sales, while hitting average prices. Meanwhile, recent data hint that young workers’ career prospects are improving, a trend that could support home sales.
Of note, confidence among home builders is running higher than levels historically seen for recent building rates for new homes. It could be that the builders who survived the housing meltdown feel particularly capable of navigating a still-choppy market.
Later this week the government will report on new-home construction, and economists expect that the pace of residential starts was just about unchanged in October compared with the prior month. Housing starts have run higher over the past year, driven by apartment building. Economists prefer to see more building of single-family homes. Putting up a single-family homes costs more and creates more jobs than building one apartment.
Also Tuesday, NAHB reported that its barometer of builders’ views on present sales of single-family homes rose five points to 62 in November. Meanwhile, a barometer of builders’ views on upcoming sales rose two points to 66. And a gauge of prospective-buyer traffic increased four points to 45.