Builder Confidence Steady in December After 3 Months Of Gains

by devteam December 16th, 2010 | Share

The National Association of Home Builders (NAHB) today released it’s Builder Confidence Index for Decemberrn</p

Eachrnmonth NAHB asks its members to describe their current perceptions of the marketrnfor new homes, their projections for six months in the future, and theirrnmeasure of the current level of buyer traffic. From the responses, which arerngiven along a continuum of poor to good in the first two instances and very lowrnto very high in the third, NAHB constructs the NAHB/Wells Fargo Housing MarketrnIndex (HMI).  A score below 50 on any ofrnthe individual questions/components or the composite index indicates that morernbuilders have a negative attitude toward the market than a positive one.  </p

The overall confidence composite was changed at an index leve of 16.  This follows three straight months of modest improvements.  However, the NAHB Index has remained under 20 every month since late 2007 with the only exception  being May 2010 just after the home buyer tax credit expired.  </p<p</p


Excerpts from the release:</p

“Builders are bracing themselves for a slow holiday season as a number of factors continue to cause uncertainty among consumers and builders alike,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “While the HMI is adjusted for seasonal factors, the typical cold-weather slowdown in sales activity is being accentuated by ongoing weakness in the job market, the rising number of foreclosures and short-sales, and very challenging credit conditions for both builders and buyers.”</p

Two out of three components of December’s HMI remained unchanged fromrn the previous month, including the component gauging current sales conditions (which remained at 16) and the component gauging sales expectations in the next six months (which was flat at 25). The component gauging traffic of prospective buyers fell a single point, to 11.</p

“The steady but low level of the HMI reflects the fact that builders andrn consumers have yet to see consistent signs that the economy is improving,” noted NAHB Chief Economist David Crowe. “The good news is that the index and its subcomponents remain above recent lows from the early fall. NAHB expects an improving job market this spring will help prospective buyers feel more confident and propel more sales activity inrn 2011. However, the continued problems that builders are facing in obtaining construction credit and accurate appraisal values could significantly slow the onset of a housing recovery.”</p

Regionally, HMI scores declined four points in the Midwest andrn West, to 13 and 11, respectively, and one point in the South, to 17. The Northeast, which can display greater month-to-month volatility due to its smaller survey sample, posted a 12-point gain to 24 in December.

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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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