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Home Builder Sentiment Keeps Rising, Hits Multi-Year High

September 26, 2016

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Based on home-builder sentiment reported by the National Association of Home Builders (NAHB), new-home starts and new-home sales should end the year with a bang.  

The NAHB’s home builder sentiment index surged six points to a 65 reading for September. This is the highest reading since last October. Optimism, in short, is at a multi-year high.  

What’s more, the good vibes home builders are feeling were broadly dispersed. The present sales component of the index also rose 6 points to 71, which also ties the multi-year high set last October. The future-sales component rose 5 points to also post at 71. This is the best reading since October 2005. The reading for traffic was up 4 points to 48, which matched the most recent high posted last November. The high before that? October 2005.

As for existing-home sales, it’s more of the same. They declined a second-consecutive month in August. This time, they declined 0.9% to 5.33 million on an annualized rate. Inventory, or rather the lack thereof, remains the scourge. Inventory was down again compared to this time last year.  Low supply frequently leads to higher prices. The median price of an existing-home home posted at $240,000 for the month, 5.1% higher than last year.      

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