Builder Confidence Rises for the Third Consecutive Month!

Guest blog by RISMedia.

Builder confidence in the market for newly built, single-family homes edged up 2 points to 21 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for December.  This marks the third consecutive month in which builder confidence has improved, and brings the index to its highest point since May 2010.

“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 NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “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.”

“This latest boost in builder confidence is a good sign that some pockets of recovery are starting to emerge across the country as extremely favorable interest rates and prices catch consumers’ attention,” says NAHB Chief Economist David Crowe. “However, it’s worth noting that while some builders have shifted their assessment of market conditions from ‘poor’ to ‘fair,’ relatively few have shifted their assessments from ‘fair’ to ‘good.’ One reason is that builders are facing downward pricing pressures from foreclosed homes at the same time that building materials costs are rising, and this is further squeezing already tight margins.”

Derived from a monthly survey that NAHB has been conducting for more than 20 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 from 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.

Each of the HMI’s three component indexes recorded substantial gains in October, November and December. The component gauging current sales conditions rose two points in the latest month to 22, the component gauging sales expectations in the next six months rose to 26, and the component gauging traffic of prospective buyers rose three points to 18, its highest level since May 2008.

Call Barrie or AnneMarie today at  (619) 992-5182  to discuss market conditions specific to your home and neighborhood!