US homebuilder sentiment rises in August, home sales likely to grow modestly in year ahead

US homebuilder sentiment rose a bit in August, thanks to rebound in sales activity. The NAHB Housing Market Index rose 2 points in August to 60, consistent with consensus projection. The August index is slightly above its year-to-date average of 58.9. The present and future single family sales components rose to 65 and 67 respectively in August. Meanwhile, prospective buyers traffic dropped slightly to 44 from 45. However, it continues to be at post-recession high levels.

Looking at the regional indices, it shows that housing market activity recovered in the South and Northeast, which recorded a rise in index to 64 and 44 respectively. However, the indices declined a bit in the West to 68 and in Midwest to 53.

Therefore, gradual recovery in single-family construction and new home sales in 2016 have maintained builder sentiment at a strong level in spite of relatively subdued economic growth, noted Wells Fargo in a research report.

The series of consistently upbeat readings from the NAHB HMI underpins the argument for a shift back toward single-family homebuilding. Thus, new home sales and single-family construction will continue to see modest growth in the year ahead, added Wells Fargo.