Assurance in the single-family home market among members of the National Association of Home Builders is increasing, according to the group’s new survey.
The NAHB/Wells Fargo Housing Market Index for October rose four
points to 18. It is the biggest one-month gain since federal tax credits
spurred the market in April 2010.
"Builder confidence regained some ground in October
due to modest improvements in buyer interest in select markets where economic
recovery is starting to take hold and where foreclosure activity has remained
comparatively subdued," said NAHB Chairman Bob Nielsen, a home builder
from Reno, Nev. "That said, confidence remains quite low as builders
continue to confront overly restrictive lending policies that are discouraging
prospective buyers, problems with new-home appraisals and widespread
uncertainty regarding federal support for home ownership."
The association’s chief economist, David Crowe, said the
results may signal a small recovery is under way.
"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,"
Crowe said. "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
Under the survey, builders are asked to rate their
perceptions of current single-family home sales and 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 are
used to calculate a seasonally adjusted index.
Any number above
50 signals that more builders see the market as good rather than poor.
Builders grow more confident
November 10, 2011