Evidence that the housing market might be stabilizing, builder confidence in the market for newly built single-family homes rose for a third consecutive month.
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Evidence that the housing market might be stabilizing, builder confidence in the market for newly built single-family homes rose for a third consecutive month.
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) edged up two points from a downwardly revised number to 21. The HMI is now at its highest level since May 2010.
"While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets," said Bob Nielsen, chairman of the NAHB and a home builder from Reno, Nev. "However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving."
"This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend," said NAHB Chief Economist David Crowe. "While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months."
Each of the HMI's three component indices rose for the third consecutive month in December. The index for current sales conditions rose two points to 22, while the component gauging sales expectations in the next six months rose one point to 26. The component gauging traffic of prospective buyers gained three points to 18, its highest level since May of 2008.
The HMI is derived from a monthly survey of builders asked to gauge current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low."