Homebuilder Confidence Surges To Highest Level In Four Years

The National Association of Homebuilders is announcing a surge in builder confidence: “Home builder confidence in the market for new single-family homes increased for the fifth consecutive month in February, rising from 25 to 29 on the NAHB/Wells Fargo Housing Market Index (HMI) released today. It is the highest level the index has reached in more than four years.”

The Calculated Risk chart above indicates that this is not a particularly precise predictor of anything, but does seem to lead the direction of new housing starts. To repeat what I’ve said many times now, the reason to be bullish that single-family homebuilding will boost the recovery in 2012 isn’t that I expect a particularly large number of housing starts. The reason is that even a historically tiny number of new housing starts would still constitute an increase. The four worst years on record for housing starts were 2011, 2010, 2009, and 2008 even though the population was much smaller decades ago. All we need is to turn in a year that’s not record-settingly bad and we’re looking at a strong contributor to growth. What’s more, the sky-high unemployment in the building trades means you can hire construction workers for cheap right now.