Builder confidence in the new single-family home market was up another five points in November 2012, to hit 46 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
November was the seventh month in a row of rising confidence. The confidence level is now at its highest point since May of 2006.
"Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country," said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, FL. "In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today's favorable prices and interest rates."
"While our confidence gauge has yet to breach the 50 mark -- at which point an equal number of builders view sales conditions as good versus poor -- we have certainly made substantial progress since this time last year, when the HMI stood at 19," observed NAHB Chief Economist David Crowe. "At this point, difficult appraisals and tight lending conditions for builders and buyers remain limiting factors for the burgeoning housing recovery, along with shortages of buildable lots that have begun popping up in certain markets."
The HMI component index to track current sales conditions posted an eight-point increase to 49, to its highest level in more than six years.
The component measuring sales expectations for the next six months showed a two-point gain to 53, and was above 50 for a third consecutive month.
The component measuring traffic of prospective buyers was flat at 35 - this after a five-point gain in the previous month.
All four regions of the United States showed gains in the HMI three-month moving average as of November 2012:
* South: a four-point gain to 43
* Midwest: three-point gains to 45
* West: three-point gains to 47
* Northeast: two-point gain to 31
The HMI survey was conducted in the two weeks immediately following Hurricane Sandy and does reflect builder sentiment during that period.
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