Builder confidence in new single-family home market rose slightly in November, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI rose one to 16 from a downwardly revised level of 15 in October.
NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, MI, said the gains were small but there had, in fact, been confidence gains for two months, which he saw as encouraging. Builders appear to be seeing more serious buyers in their model home traffic. "Builders remain very concerned, however, about the lack of available financing for new-home construction at a time when inventories of completed new homes are quite thin; after all, you can't sell what you can't build," Jones said.
"The most positive aspect of today's report is the future expectations component, which not only held onto the five-point gain it registered in October, but improved by an additional two points to 25 for November," said NAHB Chief Economist David Crowe. "This is the highest that component of the HMI has been since the home buyer tax credit program spurred sales activity this spring."
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 and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
Two out of three of the HMI's component indexes showed November improvement; the third component held steady:
• The component gauging sales expectations in the next six months rose two points to 25.
• The component gauging traffic of prospective buyers rose one point to 12.
• The component gauging current sales conditions held unchanged at 16.
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