U.S. builder confidence in the market for new, single-family homes rose three points to 20 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for November. The gain adds to a revised three-point increase in October to puts the HMI to its highest mark since May 2010.
“While this second solid monthly gain on the builder confidence scale is encouraging, the overall measure remains quite low due to the many challenges that home building continues to face with regard to the high number of foreclosures, the difficulties of obtaining construction financing and accurate appraisals, and the restrictive lending environment that is discouraging potential buyers,” said Bob Nielsen, NAHB chairman and a home builder from Reno, NV. “These problems must be addressed so that housing can contribute to economic and job growth the way it has in the past.”
“This second consecutive gain in the HMI is evidence that well-qualified buyers in select areas are being tempted back into the market by today’s extremely favorable mortgage rates and prices,” said NAHB Chief Economist David Crowe. “We are anticipating further, gradual gains in the builder confidence gauge heading into 2012 due to these pockets of improving conditions that are slowly spreading.”
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 asks builders to rate traffic of prospective buyers as “high to very high,” “average,” or “low to very low.” The scores are seasonally adjusted; an index over 50 indicates that more builders view conditions as good than poor.
All three HMI components gained in October and gain in November:
• current sales conditions component rose three points to 20 – its highest since May 2010
• future sales expectations component rose two points to 25 – its highest since March 2011
• traffic of prospective buyers rose one point to 15 - its highest since May 2010.
The HMI rose in three out of four geographic regions of the United States in November:
• Northeast: up three points gain to 17.
• Midwest: up eight points to 23.
• South: up two points gain to 21.
• West: this region increased in October, but NAHB said the region "returned to trend" in November, declining six points to 15.
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