Builder Confidence on the Rise in February
Feb 19, 2007
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Builder confidence continued to rise in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI increased from 35 in January to 40 in February, up from a low of 30 last September and the highest level since June of 2006.

“Builders are still cautious as they continue to manage their inventory, but their assessments of the demand side of the single-family market are improving,” said NAHB President Brian Catalde.  “Every component of the February HMI – present home sales, sales expectations for the next 6 months and buyer traffic -- showed a significant positive uptick in February.”

Lower energy prices, favorable mortgage rates and solid growth in employment and household income have all contributed to the recent stabilization of home buyer demand, NAHB Chief Economist David Seiders said. “In addition, builders continue to offer substantial sales incentives to move their product and limit cancellations, which has helped to firm up buyer demand.”

All three component indexes registered improvement in February. The index gauging current single-family home sales gained six points to 42, while the component measuring the traffic of prospective buyers rose five points to 31. Of particular note, the index gauging sales expectations for the next six months jumped over the 50 threshold for the first time since last June, posting a seven-point gain to 55.

“Builders are becoming increasingly convinced that the abrupt downslide in home sales is in their rear view mirrors and they see better times as they look at the road ahead,” said Seiders.

The HMI rose in all four regions in February, with the Northeast posting the biggest gain of eight points to 46. Five-point gains were registered in the Midwest and South, to 29 and 46, respectively, while the West moved up two points to 35.

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