The National Association of Home Builders (NAHB) said its new home builder members displayed a surge of confidence this month.  The NAHB/Wells Fargo Housing Market Index (HMI) jumped 7 points to 71, giving it the highest reading since June 2005.  Numbers for the three component indices were also up, however the increased confidence did not extend nationwide.  

Analysts badly undershot the HMI.  Those polled by Econoday had expected only a one point increase from February to 66.

NAHB Chairman Granger MacDonald said, "Builders are buoyed by President Trump's actions on regulatory reform," pointing specifically to a recent executive order that rescinded and revised part of the U.S. rule that impacts permitting.

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 for 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.

The HMI component measuring current sales and the forward-looking index for the next six months were both at 78, rising 7 points and 5 points respectively from the previous month.  The component gauging buyer traffic was up eight points to 54.  This was only the third time that component has been above the 50 threshold since 2005.

"While builders are clearly confident, we expect some moderation in the index moving forward," said NAHB Chief Economist Robert Dietz. "Builders continue to face a number of challenges, including rising material prices, higher mortgage rates, and shortages of lots and labor."

Across the regions, the three-month moving averages increased in the Midwest, up 3 points to 68 and in the South, gaining 1 point to 68.  The Northeast edged down one point to 48 and the West was fell 3 points to 76.