WASHINGTON – On a day that yielded mixed economic news, the Housing Market Index, which measures homebuilder confidence, hit its highest level in almost eight years this month, according to the National Association of Home Builders.
The trade association’s index rose for the fourth straight month, this time climbing three points to 59 for newly built, single-family homes.
“Any number over 50 indicates that more builders view conditions as good than poor,” according to the NAHB release.
Builders’ perceptions of current sales conditions kept pace with overall confidence, rising three points to 62; expectations for sales in the next six months rose one point to hit 68, and views of prospective-buyer traffic stayed at 45, according to the statement.
“Builders are seeing more motivated buyers walk through their doors than they have in quite some time,” said NAHB Chairman Rick Judson. “What’s more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market.”
The West, Midwest and South all improved their three-month moving averages in August. The Northeast was unchanged.
“Builder confidence continues to strengthen along with rising demand for a limited supply of new and existing homes in most local markets,” said NAHB Chief Economist David Crowe.
Construction numbers in the Federal Reserve’s industrial production release on Thursday seemed consistent with the positive homebuilders’ findings. Although construction is still just 81 percent of 2007 production, July construction rose 0.5 percentage points, according to the Fed.
However, overall industrial production numbers in July missed market expectations, the Fed said.
July’s production as a percentage of the 2007 average remained unchanged from the month prior but fell short of analyst forecasts.
“The balance of the industrial world is going to firm, but is only going to grow at just above a mediocre pace,” said IHS Global Insight Economist Michael Montgomery in research notes. “The first half was very mediocre on average. The future is brighter, just not yet, and not that much brighter.”
Mining production continues to headline all production industries and is 20 percent higher in July than it was on average in 2007.
Production of consumer goods experienced a dip in July that all but negated an increase from the month prior.
Prices of consumer goods, however, rose slightly in July to meet Wall Street expectations. The Consumer Price Index climbed at a seasonally adjusted rate of just 0.2 percent, according to the U.S. Bureau of Labor Statistics.
CPI increased at a slower rate in July than it did in June. The all-items index rose an unadjusted 2 percent during the past 12 months.
“The rise in the seasonally adjusted all-items index was the result of increases in a broad array of indexes including shelter, gasoline, apparel and food,” according to a BLS release.
Gas prices at the pump saw the largest adjusted increase but fell well short of the spike from the month before. Natural gas prices slid the most of any major category.
Core CPI, which excludes the generally volatile food and energy categories, rose at the same clip as standard CPI. Core CPI climbed 0.2 percent for the third straight month.