NAHB's Indicators of Housing Market Spike Give Spray Polyurethane Foam Contractors a Boost

WASHINGTON, D.C – August 20, 2014 – It has been a gradual process, but the housing market is coming back strong. The National Association of Home Builders (NAHB) has been reporting data throughout the housing comeback, and the data from July and August provide further evidence that the housing market is rebounding and returning to normal. The surge of housing units being built provides greater optimism for spray foam contractors, as more homeowners look to provide their homes with energy-efficient technologies.

Combined Single- and Multifamily Gains Boost Housing Starts in July

Fueled by strong single- and multifamily growth, nationwide housing starts rose 15.7 percent to a seasonally adjusted annual rate of 1.093 million units in July, the highest level since November 2013, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

"A return to production levels over one million confirms that consumer confidence continues to improve," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Del. "Propelled by a healthier economy, more and more people are feeling ready to buy a home."

Single-family housing starts were up 8.3 percent to a seasonally adjusted annual rate of 656,000 units in July, while multifamily production jumped 28.9 percent to 437,000 units.

Regionally in July, combined single- and multifamily housing production rose in the Northeast, South and West, with respective gains of 44 percent, 29 percent and 18.6 percent. Total production fell by 24.8 percent in the Midwest from an unusually high June level.

"July's increase in starts combined with rising builder sentiment proves that June's production dip was more of an anomaly than a reversal of the market," said NAHB Chief Economist David Crowe. "We should continue to see a gradual, consistent recovery throughout the rest of the year."

Issuance of building permits registered an 8.1 percent increase to a seasonally adjusted annual rate of 1.052 million units in July. Multifamily permits rose 21.5 percent to 412,000 units while single-family permits increased by 0.9 percent to 640,000 units.

The Northeast, South and West registered overall permit gains of 18.8 percent, 9.6 percent and 7.2 percent, respectively, while the Midwest posted a 0.6 percent loss.

Builder Confidence Rises Two Points in August

Builder confidence in the market for newly built, single-family homes rose two points to 55 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for August, released today. This third consecutive monthly gain brings the index to its highest level since January.

"As the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. "However, builders still face a number of challenges, including tight credit conditions for borrowers and shortages of finished lots and labor."

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted gains in August. The indices gauging current sales conditions and expectations for future sales each rose two points to 58 and 65, respectively. The index gauging traffic of prospective buyers increased three points to 42.

"Each of the three components of the HMI registered consecutive gains for the past three months, which is a positive sign that builder confidence appears to be firming following an uneven spring," said NAHB Chief Economist David Crowe. "Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand."

Every region saw a gain in its three-month moving average HMI score in August. The Midwest posted a seven-point increase to 55 and the West registered a four-point gain to 56. The Northeast posted a two-point gain to 38 and the South was up one point to 52.

Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found on the link provided below.

About NAHB: NAHB is a trade association that helps promote the policies that make housing a national priority. Since 1942, NAHB has been serving its members, the housing industry, and the public at large. For more information, please use the contact information and links provided below.