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Builder Confidence Index At 54 Month High
Posted to: MND NewsWire
Wednesday, January 18, 2012 10:46 AM
Home builder confidence rose in January
for the fourth consecutive month as builders saw more buyer traffic and
anticipated higher sales. The National
Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) rose
four points to 25 in January to reach its highest level since June 2007. Each of the three components of the HMI also
increased for the fourth month and the improved confidence was evident across
every region of the country.
The HMI is the result of a monthly
survey of NAHB has conducted for 20 years.
The survey asks the Association's home builder members their perceptions
of current single-family home sales and their expectations for such sales over
the next six months, each graded on a scale of "good," "fair," or "poor." The survey also asks builders to rate the
current traffic of prospective buyers as "high to very high," "average," or "low
to very low." Answers to each question
are used to calculate a component index and those comprise the composite
index. For each index a number over 50
indicates more builders view conditions as good than as poor.
Each of the three component indices rose
three points in January. The component
measuring current sales conditions is at 25 and the index measuring traffic of
prospective buyers is at 21, the highest point for each since June 2007; the
index reflecting expectations for the next six months rose to 29, the highest score
Bob Nielsen, NAHB chairman said of the
results, "This good news comes on the heels of several months of gains in
single-family housing starts and sales, and is yet another indication of the
gradual but steady improvement that is beginning to take hold in an increasing
number of housing markets nationwide. Policymakers must now take every
precaution to avoid derailing this nascent recovery."
"Builders are seeing greater interest among potential buyers as employment
and consumer confidence slowly improve in a growing number of markets, and this
has helped to move the confidence gauge up from near-historic lows in the first
half of 2011," noted NAHB Chief Economist David Crowe. "That said,
caution remains the word of the day as many builders continue to voice concerns
about potential clients being unable to qualify for an affordable mortgage,
appraisals coming through below construction cost, and the continuing flow of
foreclosed properties hitting the market."
The HMI also posted gains in all four regions in January, including a
nine-point gain to 23 in the Northeast, a one-point gain to 24 in the Midwest,
a two-point gain to 27 in the South and a five-point gain to 21 in the West.
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