Confidence in New Home Market Remains Steady

February 15, 2011

Builder confidence for the month of February in new home construction remained unchanged for the fourth straight month, but not because of a lack of home buyers.

According to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), builder sentiment in the market for newly built, single-family homes was at 16 this month, the same place it has been since November.

new home being built“While builders are starting to see more interest among potential home buyers, we are also dealing with a multitude of challenges, including competition from foreclosure properties and inaccurate appraisals of new homes, which are limiting our ability to sell,” said NAHB Chairman Bob Nielsen.

“On top of that, an extremely tight lending environment continues to make it almost impossible to obtain credit for viable new and existing projects, and most do not see that situation improving anytime soon.”

The HMI gauges builder perceptions of current sales and sales expectations over the next six months. A score above 50 means more builders see conditions as positive than not.

The last time the index was above 50 was in April of 2006.

The good news is that there are three components to the HMI and two of them posted an increase:

*The component gauging current sales conditions rose two points to 17.

*The component gauging sales expectations over the next six months increased one point to 25.

*The component gauging traffic of prospective buyers remained at 12.

The housing market is expected to show some improvement this year, but there will be hurdles on the road to recovery.

“Builders are telling us that some pockets of optimism have begun to emerge, but many prospective purchasers are concerned about selling their existing home in the current market, or face difficulty securing credit for a home purchase — even when they are well-qualified,” said NAHB Chief Economist David Crowe.

“Adding these concerns to the severe difficulty that builders continue to confront in obtaining acquisition, development and construction financing, you can understand why builder sentiment has not improved over the past four months.”

Categories: Economy, NAHB

About The Author

Read All Stories By Tracey



[…] sitting stagnant for the past four months, builder confidence in March for new home construction increased to its highest level in almost a […]

Leave a Comment