The feeling inside the convention center at this year’s International Builders’ Show, held last week in Orlando, Fla., was noticeably more hopeful than what the show has seen for several years—a mix of cautious optimism and relief. And show attendees weren’t the only ones, according to the latest report from the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, released today. Confidence among builders of single-family homes was up for the fifth consecutive month in February, jumping four points to a monthly reading of 29—the highest level seen and longest period of sustained growth since May 2007.
But while the gain is significant, the index is still low: Any reading less than 50 indicates that more builders consider conditions to be "poor" rather than "good." "The significant increase is coming off a small base," wrote David Goldberg, a home builder analyst at UBS, in a statement today. "We believe this reflects our view that a gradual improvement in housing is starting to unfold rather than a robust recovery."
The vast majority of the monthly gain came from the West, which improved by 110% from January, moving from a reading of 21 to a reading of 44. The Midwest also improved month-over-month, from 24 to 30, but the other two regions lost ground, the Northeast down two points to a reading of 21 and the South down three points to 25.
Each of the index’s three components improved for the fifth consecutive month in February. Builders reported a small bump in prospective buyer traffic, rising from 21 to 22 on a monthly basis. The component measuring current sales gained five points to a reading of 30. And the component measuring sales expectations for the next six months improved from 29 to 34.
Claire Easley is a senior editor at Builder.