Home Builder Confidence Marks Highest Level Since 2007

The results from the monthly National
Association of Home Builders NAHB)/Wells Fargo Housing Market Index (HMI) rose
in February for the fifth consecutive month, hitting the highest level for the
index in more than four years.  The HMI,
which gauges home builder confidence, rose from 25 in January to 29 this month.

Each month NAHB conducts a survey of its
members in which it asks them their perceptions of the market for new
homes.  They are asked to describe both
current sales and their expectations for sales over the next six months as “good,”
“fair,” or “poor.”  They are also asked
to rate the traffic of prospective buyers as”high to very high,” “average,” or “low
to very low.”  Answers to the questions are
used to construct a composite index – the HPI – and three component
indices.  A number above 50 on any index indicates
that more builders view conditions as good rather than poor.  

Each of the three components improved
for the fifth consecutive month as well. 
The index measuring traffic of prospective buyers rose from 21 to 22;
the component measuring expectations for the next six months increased from 29
to 34, and builders’ perceptions of current sales rose from 25 to 40.

NAHB Chief Economist David Crowe
noted that five months is the longest period of sustained improvement for the
HMI since 2007 and called it encouraging.  “However, it is important to remember that the
HMI is still very low, and several factors continue to constrain the market,”
he said.   Foreclosures are still competing with new home
sales, and many builders are seeing appraisals come in at less than the cost of
construction. Additionally, prospective home buyers are finding it difficult to
qualify for a mortgage.”

NAHB Builder Confidence vs. Building Permits

Click Here to View the Housing Confidence Chart

…(read more)

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