U.S. NAHB Housing Index signals higher investments and housings starts going forward

The National Association of Homebuilders/Wells Fargo Housing Market Index (NAHB) rose two points to 60 in August, in line with expectations. At 60, the index is only fractionally below the 2016 high of 61 and continues to suggest solid underlying confidence in the sector.

The level of the NAHB-index points at higher investments and housings starts going forward. The current sales expectations index rose to 65 from 63 with the sales expectations index rising slightly to 67 from 66, while the buyer traffic component edged lower for the second month running to 44 from 45.

The dip in buyer traffic will maintain some concerns that affordability issues are discouraging potential buyers. However, steady job growth and low interest rates will likely boost prospects for the residential real-estate market in the second half of the year.

"Historically low mortgage rates increased household formations and a firming labour market will keep the housing market on an upward path during the rest of the year. Overall sentiment surrounding the sector also remained firm with rising construction rates," said NAHB Chief Economist Dietz.

The housing market has picked up this year. Existing home sales rose to their highest level in more than nine years in July, but home construction stalled. That said builders remain optimistic overall despite a slowdown in economic growth in the first half of the year. Home builders were more optimistic about the market for single-family homes, boosting hopes that a recent rise in home buying could lead to more construction.