Confidence among US home builders is at its highest level in nearly eight years, fueled by optimism that demand for new homes will drive sales growth into next year.
The brighter sales outlook is the latest sign pointing to a sustained pickup in construction in coming months and comes as applications for permits to build single-family houses are at a five-year high.
The National Association of Home Builders/Wells Fargo builder sentiment index released Thursday jumped to 59 this month from 56 in July. It was the fourth consecutive monthly gain.
A reading above 50 indicates more builders view sales conditions as good, rather than poor.
The last time the reading was above 59 was in November 2005, when it was 61. US sales of new homes peaked in July that year.
Measures of current sales conditions and builders’ outlook for single-family home sales over the next six months each increased to their highest levels in at least seven years. Builders’ gauge of traffic by prospective buyers was unchanged.
Steady hiring, rising home prices, and still-low mortgage rates are encouraging more people to buy homes. New-home sales jumped 8.3 percent in June to a seasonally adjusted annual rate of 497,000, the fastest pace in five years.
That’s still below the 700,000 pace consistent with healthy markets, but represents an increase of 38 percent over the previous 12 months, the biggest annual gain since January 1992.
On a regional basis, confidence rose in the West, Midwest, and South, but was unchanged among builders in the Northeast.