Home Builder Confidence Rises Again

Posted by Orb Staff on October 16, 2012 No Comments
Categories : Residential Mortgage

12576_homebuilder3 Home Builder Confidence Rises Again Builder confidence in the market for newly built, single-family homes edged slightly higher for a sixth consecutive month in October, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The latest, one-point gain brings the index to 41, its strongest level since June of 2006.

‘Many builders are reporting increases in the number of serious buyers visiting their sales offices, and the overall confidence measure is much higher than it was at this time last year,’ says NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. ‘The concern is that, even though demand for new homes is rising, overly tight credit conditions are still constraining new building and new purchases at a time when that kind of economic activity and the job growth it generates are greatly needed.’

Following substantial increases in the previous month, the HMI components measuring current sales conditions and sales prospects for the next six months each remained unchanged in October at 42 and 51, respectively. Meanwhile, the component measuring traffic of prospective buyers increased 5 points to 35, its highest level since April 2006.

Builder confidence continued to improve in three out of four regions in October. Looking at three-month moving averages, the HMI gained two points in the Midwest and West to 42 and 44, respectively, and three points in the South, to 39. A three-month moving average for the Northeast's HMI held unchanged at 29.

Derived from a monthly survey that NAHB has been conducting for the past 25 years, the HMI 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 sales conditions as good than poor.

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