The NAHB's Housing Market Index, which is the housing industry's leading measure of builder confidence, showed positive growth in January.

By Peter Ricci

Builder confidence in the newly built, single-family homes market held firm in January, remaining at a level of 47 in the NAHB’s Housing Market Index, the industry’s leading measure of builder confidence.

That’s the eighth consecutive month of gains for the Housing Market Index, which is now at its highest level since April 2006.

Builder Confidence Stays Strong in Housing Market Index

The Housing Market Index measures builder confidence through a monthly survey, which asks builders to offer their perceptions of current sales conditions; sales expectations for the next six months; and finally, traffic of prospective homebuyers. For the most part, the Housing Market Index offered much promise in January

• The index’s component for current sales conditions held steady at 51; any number over 50 indicates that more builders view conditions as good than poor.
• The component for traffic of prospective homebuyers gained one point, rising to 37.
• Only the component for sales expectations dipped slightly, falling one point to 49.
• The three-month moving average for the Housing Market Index, which the NAHB computes for the nation’s regions, was uniformly positive, with the index increasing two points for both the Northeast and Midwest (to respective levels of 36 and 50), three points for the South (now at 49) and four points for the West (now at 51).

High Hopes for Housing Construction in 2013

David Crowe, the NAHB’s chief economist, said builder confidence is tipping ever close to that magical 50 number, though the current momentum of the housing market would seem to indicate good things going forward.

“Builders’ sentiment remains very close to the index’s tipping point of 50, where an equal number of builders view conditions as good and poor, and fundamentals indicate continued momentum in housing this year,” Crowe said.

And Barry Rutenberg, the NAHB’s chairman, said that builder confidence has improved noticeably from a year ago.

“Conditions in the housing market look much better now than at the beginning of 2012 and an increasing number of housing markets are showing signs of recovery, which should bode well for future home sales later this year,” Rutenberg said.

And what was the Housing Market Index in January 2012, you might ask? In January 2012, the Housing Market Index was just 25.