Builder Confidence at Highest Level Since 2007

The housing industry got a dose of good news today when the National Association of Home Builders (NAHB) announced builder confidence in the market for newly built, single-family homes rose four points in January to 25. It marked the fourth consecutive month of gains in the NAHB/Wells Fargo Housing Market Index (HMI) and the highest level since June 2007.

"Builder confidence has now risen four months in a row, with the latest uptick being universally represented across every index component and region," said Bob Nielsen, chairman of the NAHB. "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," said 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."

Each of the HMI's three component indexes registered a fourth consecutive month of improvement in January. The component gauging current sales conditions rose three points to 25, which is its highest point since June of 2007. The component gauging sales expectations in the next six months also rose three points, to 29-its highest point since September 2009. And the component gauging traffic of prospective buyers rose three points to 21, its highest point since June of 2007.