Builder Confidence Index At 54 Month High

by devteam January 18th, 2012 | Share

Home builder confidence rose in Januaryrnfor the fourth consecutive month as builders saw more buyer traffic andrnanticipated higher sales.  The NationalrnAssociation of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) rosernfour points to 25 in January to reach its highest level since June 2007.  Each of the three components of the HMI alsornincreased for the fourth month and the improved confidence was evident acrossrnevery region of the country.</p

The HMI is the result of a monthlyrnsurvey of NAHB has conducted for 20 years. rnThe survey asks the Association’s home builder members their perceptionsrnof current single-family home sales and their expectations for such sales overrnthe next six months, each graded on a scale of “good,” “fair,” or “poor.”  The survey also asks builders to rate therncurrent traffic of prospective buyers as “high to very high,” “average,” or “lowrnto very low.”  Answers to each questionrnare used to calculate a component index and those comprise the compositernindex.  For each index a number over 50rnindicates more builders view conditions as good than as poor.</p

Each of the three component indices rosernthree points in January.  The componentrnmeasuring current sales conditions is at 25 and the index measuring traffic ofrnprospective buyers is at 21, the highest point for each since June 2007; thernindex reflecting expectations for the next six months rose to 29, the highest scorernSeptember 2009. </p

Bob Nielsen, NAHB chairman said of thernresults, “This good news comes on the heels of several months of gains inrnsingle-family housing starts and sales, and is yet another indication of therngradual but steady improvement that is beginning to take hold in an increasingrnnumber of housing markets nationwide. Policymakers must now take everyrnprecaution to avoid derailing this nascent recovery.”<br /<br /"Builders are seeing greater interest among potential buyers as employmentrnand consumer confidence slowly improve in a growing number of markets, and thisrnhas helped to move the confidence gauge up from near-historic lows in the firstrnhalf of 2011,” noted NAHB Chief Economist David Crowe. “That said,rncaution remains the word of the day as many builders continue to voice concernsrnabout potential clients being unable to qualify for an affordable mortgage,rnappraisals coming through below construction cost, and the continuing flow ofrnforeclosed properties hitting the market.”<br /<br /The HMI also posted gains in all four regions in January, including arnnine-point gain to 23 in the Northeast, a one-point gain to 24 in the Midwest,rna two-point gain to 27 in the South and a five-point gain to 21 in the West.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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