Builder confidence at six-year high

WASHINGTON – Dec. 18, 2012 – Builder confidence in the market for newly built, single-family homes rose for an eighth consecutive month in December to a level of 47 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. It’s a two-point gain from a slightly revised November reading, and the highest level the index has attained since April of 2006.

“Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market,” says NAHB Chairman Barry Rutenberg, a home builder from Gainesville. “However, one thing that is still holding back potential home sales is the difficulty many families encounter in getting qualified for a mortgage due to today’s overly stringent lending standards.”

“While there is still much room for improvement, the consistent upward trend in builder confidence over the past year is indicative of the gradual recovery that has been taking place in housing markets nationwide, and that we expect to continue in 2013,” adds NAHB Chief Economist David Crowe.

Two of the HMI’s three component indexes are now above the critical midpoint of 50. (A score above 50 indicates that builders’ attitudes are more positive than negative.) The component gauging current sales expectations rose two points to 51 in December, while the component gauging sales expectations in the next six months slipped one point, to 51. The component measuring traffic of prospective buyers increased one point, to 36.

Derived from a monthly survey that NAHB has been conducting for the past 25 years, 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 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.

builder construction© 2012 Florida Realtors®

Reprinted with permission. Florida Realtors®. All rights reserved.

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