Home Builder Confidence Still Unable to Gain Momentum

by devteam December 15th, 2009 | Share

Builders continue to be skepticalrnabout the near term prospects of the real estate market according to detailsrnfrom the December National Association of Home Builders (NAHB)/Wells FargornHousing Market Index (HMI) released on Tuesday.

The overall Index which shows buildersrnperception of the market was 16, one point lower than in November and thernlowest point since June. Any score over 50 indicates that more builders view marketrnas good rather than poor, a condition that hasn't existed in several years.

The HMI is constructed fromrnreplies to three questions posed to builders. rnEach respondent is asked to rate both his current perceptions of thernmarket and his expectations for the market in six months on a scale consistingrnof “good,” “fair,” or “poor” responses.  Eachrnis also asked to rate prospective buyer traffic as “high to very high,” “average”rnor “low to very low.”  In addition to therncomposite score a score is given for each of the three components. NAHB hasrnconducted this survey every month for over 20 years.

Two out of the three componentrnscores were also down.  Current sales conditionsrnwere scored at 16, a one point decline since November while expectations for salesrnin six months was 26, down two points. rnCurrent traffic was rated at 13 for the third consecutive month. 

 “From an affordability standpoint, rarely hasrnthere been a better time in history to purchase a home, thanks to record lowrninterest rates, attractive prices, and of course the recent extension andrnexpansion of the home buyer tax credit,” said Joe Robson, Chairman of NAHB andrna home builder from Tulsa, Oklahoma. “However, builders are not seeing the fullrnimpact of these conditions on buyer demand, partly because awareness of thernlatest incentives is still building, and partly because of concerns about jobrnsecurity and other economic woes.”

“As wernanticipated, this is shaping up to be a bumpy recovery period for the housingrnmarket,”   noted NAHB Chief Economist David Crowe. “While somernfamilies may be just starting to factor the expanded tax credit into theirrnpotential home buying plans, many are hesitating because of the poor economy.rnAt the same time, tight lending conditions for both consumers and home buildersrncontinue to pose considerable obstacles on the road to a sustained housing andrneconomic recovery.”

Builders had arnbrighter outlook in the Northeast region where the HMI gained three points tornscore 23.  The West was up one point torn19.  Builders in the Midwest took the dimmestrnview of their prospects – the index declined two points to 12.  The South was unchanged at 17.

Here is a table summarizing the results…

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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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