After dipping a bit in October, Builder confidence is back up to where it was in September. Headlines read that builder confidence is up, we’d like to think of it as builder confidence bouncing subtly at the bottom as they struggle to obtain financing and keep interest as they compete with the perception that short sales and foreclosures are better deals.
According to the National Home Builders Association in conjunction with Wells Fargo, the “Housing Market Index” (HMI) gauging builder perceptions of builder perceptions of current single-family home sales, buyer traffic and sales expectations, with all numbers bumping back up this month.
“Though the gains have been incremental, the fact that builder confidence has improved over the past two months is encouraging,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “Many builders are reporting that while the quantity of buyer traffic through their model homes has not improved dramatically, the quality of that traffic seems to be getting better – meaning that more people appear to be serious about buying in the near future.”
Although rising nationally, the HMI dipped in the Northeast, stayed steady in the West and rose in the South and Midwest.
As we’ve been saying for a long time, without employment rates improving, builders will continue to suffer along with all sectors of real estate and heck, all sectors of the economy. The coming weeks in the lame duck Congress won’t likely change employment, but we’ll hold out hope for a miracle!
BawldGuy
November 17, 2010 at 11:31 am
Just the other day, D.R. Horton told us they thought 2011 was gonna be pretty ‘challenging’. They don’t share their competitors’ outlook.
What’s your take?
Lani Rosales
November 17, 2010 at 4:58 pm
I think they’re more realistic than the overall builder community. But honestly, I think they all see challenge and even doom, but most are seeing an uptick in traffic, so it’s feeling a little more warm and fuzzy than 2009 (but most anything feels good compared to ’09)… what do you think?
BawldGuy
November 17, 2010 at 5:15 pm
I think it matters greatly whether the product attracts long term investors or not. If not, I tend to think Horton is probably, as you astutely suggested, more realistic. The rest are figuring out how to keep their crews workin’ without damaging their own bottom line. That’s an express lane to disappearing.
A solid example is Austin. Those who didn’t leave for greener investment pastures, stop investing their, have paid the price. Ironically, Austin is one of the most economically healthy regions in the country. But their real estate lost its allure where investors are concerned.
I don’t think it’s coincidental their local politics are more aligned with my state than Texas.
Kelsey Teel
November 17, 2010 at 9:13 pm
“Many builders are reporting that while the quantity of buyer traffic through their model homes has not improved dramatically, the quality of that traffic seems to be getting better – meaning that more people appear to be serious about buying in the near future.”
Great to hear that! Consumer confidence, along with jobs is a critical driving factor of our economy. If consumers aren’t confident, they aren’t spending money anywhere, driving all sectors of the economy down. If consumers are confident, they are spending money, increasing demand, and ultimately creating more jobs. (Not that you didn’t already know that) 😉
I’ve been told that the only reason we have been calling this a “recession” instead of what it really is, a “depression” is to keep that consumer confidence up.