NEW YORK - Builders’ confidence in the market for new single-family homes gained in February, as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – rose to 17 from January’s 15, the group announced this afternoon.
Thomson Reuters' poll of economists predicted a level of 16.
“Builders are just beginning to see the anticipated effects of the home buyer tax credit on consumer demand,” said NAHB Chief Economist David Crowe. “Meanwhile, another source of encouragement is the improving employment market, which is key to any sustainable economic or housing recovery. That said, several limiting factors are still weighing down builder expectations, including the large number of foreclosed homes on the market, the lack of available credit for new and existing projects, and inappropriately low appraisals tied to the use of distressed properties as comps.”
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.
Two of the three component indexes grew in February. The current single-family home sales index jumped to 17 from 15, and the sales expectations index for the next six months was up to 27 from 26. The traffic of prospective buyers index remained at 12.
