Builder Confidence Gaining Ground

November 17, 2011

Builder confidence in the market for newly built, single-family homes hit its highest level since May 2010 this month.

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rose three points to 20 in November. It’s the second straight significant increase, though remember that this is measured on a 100-point scale.

lone shovel in the ground.“While this second solid monthly gain on the builder confidence scale is encouraging, the overall measure remains quite low due to the many challenges that home building continues to face with regard to the high number of foreclosures, the difficulties of obtaining construction financing and accurate appraisals, and the restrictive lending environment that is discouraging potential buyers,” said Bob Nielsen, NAHB Chairman. “These problems must be addressed so that housing can contribute to economic and job growth the way it has in the past.”

Three out of the four regions saw HMI increases this month, including the Midwest, which gained eight point to 23.

The Northeast rose three points to 17, and the South gained two points to register 21.

After a big increase in October, the West region fell six points this month to 15.

Each of the HMI’s three component indexes, which posted gains last month, continued that trend this month:

*The component gauging current sales conditions rose three points to 20, its highest level since May 2010.

*The component gauging future sales expectations rose two points to 25, its highest level since March of 2011.

*The component gauging traffic of prospective buyers rose one point to 15, its highest point since May of 2010.

“This second consecutive gain in the HMI is evidence that well-qualified buyers in select areas are being tempted back into the market by today’s extremely favorable mortgage rates and prices,” said NAHB Chief Economist David Crowe.

“We are anticipating further, gradual gains in the builder confidence gauge heading into 2012 due to these pockets of improving conditions that are slowly spreading.”

Categories: Economy, NAHB, New Homes

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