Builder confidence improves a bit
Builder confidence in the market for newly built, single-family homes improved four points to a 58 reading on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) for December, released today. Any reading above 50 indicates that more builders are confident in the market than not. This month’s reading comes after a rocky few months for the new home sector.
“The recent spike in mortgage interest rates has not deterred consumers as rates are still near historically low levels,” said NAHB Chief Economist Dr. David Crowe. “Following a two-month pause in the index, this uptick is due in part to release of the pent-up demand caused by the uncertainty generated by the October government shutdown. We continue to look for a gradual improvement in the housing recovery in the year ahead.”
“This is definitely an encouraging sign as we move into 2014,” said National Association of Home Builders (NAHB) Chairman Rick Judson. “The HMI is up 11 points since December of 2012 and has been above 50 for the past seven months. This indicates that an increasing number of builders have a positive view on where the industry is going.”
All components improved this month
All three components of the Index rose in December. The index gauging current sales conditions jumped six points to 64, while the index gauging expectations for future sales rose two points to 62. The index gauging traffic of prospective buyers gained three points to 44.
Looking at the three-month moving averages for regional HMI scores, the South edged one point higher to 57 while the Northeast, Midwest and West each fell a single point to 38, 59 and 59, respectively.
As lending remains tight, builders will continue to struggle to obtain financing and buyers will continue to struggle qualifying, but the purse strings are loosening very slightly; perhaps enough to help this hard hit sector get back on track. Builders are feeling confident, perhaps consumer sentiment will soon follow.