NEW YORK - Builders’ confidence in the market for new single-family homes gained slightly, as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – rose to 17 in March from 16 in February. The index had been at 16 for four months.
Thomson Reuters' poll of economists predicted a level of 17.
“Builders are cautiously looking forward to the spring home buying season in hopes that improving economic conditions will help bring more buyers to the table,” said NAHB Chairman Bob Nielsen. “However, the same factors that have been weighing down the market are still very much in play, particularly competition from short sales and foreclosures, consumers’ inability to sell their existing home, appraisals that are coming in below construction cost due to the inappropriate use of distressed properties as comps, and restrictive lending conditions for both buyers and builders.”
“While many home buyers are still holding off on making a purchase, builders did indicate slightly increased optimism about the future with a two-point gain in the HMI component gauging sales expectations for the next six months,” NAHB Chief Economist David Crowe said. “In fact, prevailing indicators portend some improvement in the overall economy, which should generate modest housing market gains later this year.” But, he added, “Unfortunately, most small builders report that they are no more able to obtain credit for new construction today than they have been in the past year, and this is a major impediment that is keeping them from putting their crews back to work.”
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 were flat in March. The current single-family home sales index stayed at 17, and the traffic of prospective buyers index remained at 12. The sales expectations index for the next six months climbed to 27 from 25.
