NEW YORK - Builders’ confidence in the market for new single-family homes improved but remained quite low as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – gained to 25 in January, its highest level since June 2007, from 21 in December.
Thomson Reuters' poll of economists predicted the index would be 22.
“Builder confidence has now risen four months in a row, with the latest uptick being universally represented across every index component and region,” said NAHB Chairman Bob Nielsen. “This good news comes on the heels of several months of gains in single-family housing starts and sales, and is yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide -- and that has been shown by our Improving Markets Index. Policymakers must now take every precaution to avoid derailing this nascent recovery.”
“Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near-historic lows in the first half of 2011,” NAHB Chief Economist David Crowe said. “That said, caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market.”
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
All three component indexes increased in January. The current single-family home sales index climbed to 25, its highest since June 2007, from 22, and the sales expectations index for the next six months rose to 29, its highest since September 2009, from 26. The traffic of prospective buyers index increased to 21, its highest since June 2007, from 18.
