U.S. home builder confidence in the market for new single-family homes increased for the fifth consecutive month, rising from 25 in January 2012 to 29 in February on the NAHB/Wells Fargo Housing Market Index (HMI). It is the highest level for the index in four years.
“Builder confidence has doubled since September as measured by the HMI,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, FL. “Given the recent improvements in new home starts and the increasing number of markets included in the NAHB/First American Improving Markets Index, this consistency suggests that the housing market is moving toward more sustainable growth.”
But the market is still fragile, Rutenberg said, with big differences between individual markets, and he said policymakers need to be on guard against actions that could impede or reverse the gains.
“This is the longest period of sustained improvement we have seen in the HMI since 2007, which is encouraging,” said NAHB Chief Economist David Crowe.
But, he added, the index is still very low and several market constraints remain in-place.
"Foreclosures are still competing with new home sales, and many builders are seeing appraisals come in at less than the cost of construction," Crose said. "Prospective home buyers are finding it difficult to qualify for a mortgage.”
Each of the three HMI components improved for the fifth month:
• The measure of traffic of prospective buyers rose from 21 in January to 22 in February.
• The measure of sales expectations for the next six months rose from 29 to 34.
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