NEW YORK - Builders’ confidence in the market for new single-family homes rose for the first time in five months, as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – jumped to 16 in October from an unrevised 13 in September.
Thomson Reuters' poll of economists predicted a level of 14.
“Builders are starting to see some flickers of interest among potential buyers, and are hopeful that this interest will translate to more sales in the coming months,” said NAHB Chairman Bob Jones. “However, because most builders still have no access to credit for building homes, there is a real concern that we will not be able to meet the pent-up demand when consumers are ready to get back in the market. This problem threatens to severely slow the housing and economic recovery.”
“The new-homes market is finally moving past the lull that occurred when the home buyer tax credits expired and economic growth stalled this summer,” NAHB Chief Economist David Crowe said. “While challenges such as competition from foreclosures, inaccurate appraisal values, and general consumer uncertainty about the economy and job market continue to be major factors, builders have seen a slight increase in consumers who are considering a home purchase. The toughest obstacles really come down to financing – the scarcity of construction credit for builders along with tougher mortgage requirements for consumers.”
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.
The three component indexes all gained in October. The current single-family home sales index rose to 16 from 13, and the sales expectations index for the next six months increased to 23 from 18. The traffic of prospective buyers index climbed to 11 from 9.
