After two months of gains the index
measuring builder confidence has reached its highest level in 17 months
according to data released today by the National Association of Home Builders
(NAHB) and Wells Fargo. The Housing
Market Index (HMI) for November was up three points to 20. The index also rose three points in October.
NAHB and Wells Fargo have conducted the survey
for over 20 years. It measures NAHB members'
confidence in the new home market through their responses to three
questions. The first measures builder
perceptions of current single-family sales as "good", "fair", or "poor" and,
using the same scale, their expectations of sales over the next three
months. The third question asks builders
to rate the traffic of prospective buyers as "high to very high", "average" or "low
to very low". Responses to all three questions
are used to construct the composite index.
An index total over 50 indicates the more builders have a positive view
of market conditions than have a negative view.
The index measuring current sales
conditions also rose three points to 20, while the index gauging future sales
expectations increased two points to 25 and the component measuring traffic was
up one point to 15. All three components
are at the highest levels since the spring of 2010.
On a regional basis the Northeast
registered a three-point gain to 17; the Midwest was up 8 points to 23, and the
South improved 2 points to 21. The West,
which had increased substantially in October, plunged six points to 15 in
"While this second solid monthly
gain on the builder confidence scale is encouraging, the overall measure
remains quite low due to the many challenges that home building continues to
face with regard to the high number of foreclosures, the difficulties of
obtaining construction financing and accurate appraisals, and the restrictive
lending environment that is discouraging potential buyers," said Bob
Nielsen, NAHB Chairman. "These
problems must be addressed so that housing can contribute to economic and job
growth the way it has in the past."