Builder confidence is up

According to the the NAHB/Wells Fargo Housing Market Index (HMI) released today, builder confidence in the market for newly built, single-family homes continued rose for a fourth consecutive month in January, up four points to 25, representing the highest level the index has attained since June of 2007.

“Builder confidence has now risen four months in a row, with the latest uptick being universally represented across every index component and region,” noted Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “This good news comes on the heels of several months of gains in single-family housing starts and sales, and is yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide — and that has been shown by our Improving Markets Index. Policymakers must now take every precaution to avoid derailing this nascent recovery.”

Each of the HMI’s three component indexes registered a fourth consecutive month of improvement in January. Sentiment regarding current sales conditions rose three points to 25, its highest point since June of 2007. Sentiment regarding sales expectations in the next six months also rose three points, to 29, its highest point since September 2009. Sentiment regarding the traffic of prospective buyers rose three points to 21, its highest point since June of 2007.

The HMI rose in all four regions in January, including a nine-point gain to 23 in the Northeast, a one-point gain to 24 in the Midwest, a two-point gain to 27 in the South and a five-point gain to 21 in the West.

“Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near-historic lows in the first half of 2011,” noted NAHB Chief Economist David Crowe. “That said, caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market.”

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