In this photo taken July 15, 2011, carpenters work to enclose a roof on a home being built in Sprinfield, Ill.Seth Perlman/The Associated Press
U.S. home builders grew slightly more optimistic about the housing market in August, putting their confidence at levels last seen a decade ago during the debt-fueled housing boom.
The National Association of Home Builders/Wells Fargo builder sentiment index released Monday rose this month to 61, the highest level since November 2005. The reading was 60 in both June and July. Any reading above 50 indicates more builders view sales conditions as good, rather than poor.
"The fact the builder confidence has been in the low 60s for three straight months shows that single-family housing is making slow but steady progress," said Tom Woods, a Missouri-based builder and chairman of the National Association of Home Builders.
The combination of stable job gains and low mortgage rates has bolstered sales of new homes this year. But unlike a decade ago, sentiment has improved without the same dramatic increases in mortgage debt that ultimately led housing prices to crash and threw the economy into a steep recession. Outstanding mortgage debt nationwide fell 0.7 per cent in the April-June quarter to $8.12 trillion, putting it at roughly the same level as three years ago when the housing market bottomed, the Federal Reserve Bank of New York reported last week.
Builders' view of current sales conditions and buyer traffic improved in August, while sales prospects over the next six months were stable. Still, builders say that are finding it difficult to buy land and hire construction crews.
Through the first half of 2015, the government reported that new-home purchases shot up 21.2 per cent to 274,000.
This comes as employers have added 2.9 million workers over the past year and the unemployment rate has dropped to 5.3 per cent from 6.2 per cent. The hiring has infused the economy with new paychecks that have supported the spending on housing and autos, among other expenses.
And average mortgage rates remain under 4 per cent, putting them about two percentage points below this historical average.
Mortgage giant Freddie Mac said the average rate on a 30-year fixed-rate mortgage was 3.94 per cent last week.