Builder confidence on the rise
With this morning’s news that luxury builder Taylor Morrison was acquired for nearly a billion dollars, it is no surprise as we suspected builder confidence would soon perk up, even if only slightly.
According to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for July builder confidence is up two points after a three point dip in June, with declining points for the majority of the last year.
The outlooks that rose most were the sentiments on current sales with the highest jump in confidence in sales over the next six months while feelings toward traffic didn’t change.
Although the index is simply holding right now and regional outlooks vary, this is good news for the sector most hard hit by tightened lending.
Regionally, the index rose one point in the Midwest which maintains the lowest confidence of all regions. The West rose three points and follows the Midwest in low levels, and although the Northeast dropped, it is still second highest in confidence beaten only by the South which rose three points and now has the highest confidence level of all regions.
NAHB weighs in
“The improvement in builder confidence in July is a positive sign that the outlook perhaps isn’t quite as bleak as was feared in June,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB). “While builders continue to confront serious challenges with regard to competition from foreclosed properties that are priced below replacement cost, inaccurate appraisals of new homes, and a very restrictive lending environment for new home construction, select markets are showing gradual improvement as consumers begin to take advantage of very favorable buying conditions.”
“We view the upward movement in the July HMI as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season,” said NAHB Chief Economist David Crowe. “The strong rebound in sales expectations for the next six months likewise marks a return to trend. Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve.”