Boosted by favorable home-buying conditions and signs that the job market is slowly on the mend, builder confidence in the new single-family home market rose two points to 17 this month, according to the NAHB/Wells Fargo Housing Market Index (HMI) released on Feb. 16.
"Continued low interest rates, very attractive home prices that appear to have stabilized in many markets and the availability of the home buyer tax credit make this an opportune time for potential purchasers," said NAHB Chairman Bob Jones. "As a result, builders are slightly more optimistic that the housing recovery is finally beginning to take root."
"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 Housing Market Index gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective home buyers. 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 HMI in February was at its highest level since November, showing gains in two of its three component indexes. Current sales conditions rose two points to 17 and sales expectations climbed one point to 27. Traffic of prospective buyers remained flat, at 12.
Regionally, February's HMI results were mixed, with the Midwest and South each rising two points, to 13 and 19, respectively, while confidence declined by a single point in both the Northeast and West, to 19 and 14.
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