Builder Confidence Building Up

December 19, 2011

For the third straight month, home builders are feeling more confident.

On Monday, the National Association of Home Builders released its NAHB/Wells Fargo Housing Market Index (HMI) for December to show that builder confidence in the market for newly built, single-family homes rose two points to 21.

That improvement brings the index to its highest point since May of 2010. Of course, remember that an average score is 50.

close-up on a worker's toolbelt.“While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets,” said Bob Nielsen, NAHB chairman. “However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving.”

Each of the HMI’s three component indexes saw a third consecutive month of improvement in December:

*The component gauging current sales conditions rose two points to 22.

*The component gauging sales expectations in the next six months increased one point to 26.

*The component gauging traffic of prospective buyers gained three points to 18, which is its highest level since May of 2008.

“This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend,” said NAHB Chief Economist David Crowe. “While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months.”

Categories: Economy, New Homes

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