Builder confidence Goes up!

By
Mortgage and Lending with PrimeLending, Plains Capital Bank Company

Builder confidence in the market for newly built, single-family homes edged up from a downwardly precedent according to the National Association of Home Builders Housing Market Index for December. This marks a third consecutive month in which builder confidence has improved, and brings the index to its highest point since May of 2010.

While builder confidence had remained low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets according to the National Association of Home Builders. However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving.

This is the first time that builder confidence has improved for three consecutive months since 2009, which signifies a legitimate though slowly emerging upward trend. While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months.

According to a monthly survey that NAHB has been conducting for more than 20 years, the Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months. 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.

Each of the HMI’s three component indexes registered a third consecutive month of improvement in December. The component gauging current sales conditions rose in the latest month, while the component gauging sales expectations in the next six months edged up even further. The component gauging traffic of prospective buyers also gained, which is its highest level since May of 2008.

Builder confidence primarily gained strength in the South in December its highest level since March of 2008.

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