Builder confidence in the market for newly built single-family homes increased for the fifth consecutive month, rising from 25 to 29, according to the NAHB/Wells Fargo Housing Market Index (HMI). Builder confidence now stands at its highest point since May 2007.
"Builder confidence has doubled since September as measured by the HMI," said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. "Given the recent improvements in new home starts and the increasing number of markets included in the NAHB/First American Improving Markets Index, this consistency suggests that the housing market is moving toward more sustainable growth."
"This is the longest period of sustained improvement we have seen in the HMI since 2007, which is encouraging," said NAHB Chief Economist David Crowe. "However, it is important to remember that the HMI is still very low, and several factors continue to constrain the market. Foreclosures are still competing with new home sales, and many builders are seeing appraisals come in at less than the cost of construction. Additionally, prospective home buyers are finding it difficult to qualify for a mortgage."
Each of the HMI's three components also improved for a fifth consecutive month in February. The component measuring traffic of prospective buyers rose from 21 to 22, and the component measuring sales expectations for the next six months increased from 29 to 34. The component measuring current sales rose from 25 to 30. Any HMI reading over 50 indicates that more builders view conditions as good than poor.
