Builder confidence in the market for newly built, single-family homes rose by three points to 20 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for November. The gain builds on a revised three-point increase in October, and brings the confidence gauge to its highest level since May of 2010.
“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 and a home builder from Reno, Nev. “These problems must be addressed so that housing can contribute to economic and job growth the way it has in the past.”
“This second consecutive gain in the HMI is evidence that well-qualified buyers in select areas are being tempted back into the market by today's extremely favorable mortgage rates and prices,” said NAHB Chief Economist David Crowe. “We are anticipating further, gradual gains in the builder confidence gauge heading into 2012 due to these pockets of improving conditions that are slowly spreading.”
Each of the HMI's three component indexes continued to build on gains registered in the previous month in November. The component gauging current sales conditions rose three points to 20 - its highest level since May 2010 - while the component gauging future sales expectations rose two points to 25 - its highest level since March of 2011. The component gauging traffic of prospective buyers rose one point to 15, which was its highest point since May of 2010.
The HMI rose in three out of four regions in November, with a three-point gain to 17 registered in the Northeast, an eight-point gain to 23 registered in the Midwest, and a two-point gain to 21 registered in the South. After posting a big increase in October, the West returned to trend this month with a six-point decline to 15.
HMI tables can be found at www.nahbgreen.org/hmi . More information on housing statistics is also available at www.housingeconomics.com .