After remaining depressed for years, the National Association of Home Builders Index is on the rise. In July, the NAHB Index of builder confidence jumped 6 points to 35, the biggest one month gain in almost a decade and its highest level since March 2007. Builders are saying that buyer traffic and sales are improving rapidly.
Readings above 50 mean that more builders see conditions as good than poor. Readings below 50 mean more builders see poor conditions than good conditions. Compared to history, a reading of 35 is low, but after falling to an all-time low of 13 in June 2011, the index has climbed consistently, nearly tripling in the past 13 months. In other words, the number of builders who see poor conditions is falling rapidly relative to those whose see good conditions. It will be a very long time before housing returns to outright boom times, but the housing market has definitely turned the corner and housing looks to once again add to GDP in the second quarter. The plow horse economy continues to move forward.
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