Builder Confidence on the Rise

  Builder confidence in the market for newly built, single-family homes rose one point in August to its highest level in more than a year, according to the latest reading of the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Building on a two-point gain in July, the HMI reached 18 this month, its highest point since June of 2008.

“Home builder expectations have been buoyed by the success of the first-time home buyer tax credit and its anticipated boost to buying activity leading up to the Nov. 30 expiration date,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “The question is what happens after that- whether there will be enough momentum to keep us moving toward a recovery, particularly in light of significant headwinds such as the severe credit crunch for housing production loans and inappropriate appraisal practices that are scuttling a quarter of all new-home sales. Unless Congress and the Administration focus their attention on housing right now, this improvement may well be short-lived,” he said.

“One very positive aspect of this report is the big gain registered in the component gauging home builders’ expectations for the next six months,” noted NAHB Chief Economist David Crowe. “This reflects anticipated sales stemming from the tax credit as well as recent signs that an economic recovery has begun. There is definitely a sense of hope among builders that the worst of the downturn is over and that a turning point is near at hand. Meaningful action by Congress could ensure that this upward momentum continues and that housing can help push the economy back onto solid ground.”

 Two out of three of the HMI’s component indexes recorded substantial gains in August. The biggest boost, of 4 points, was registered by the index gauging sales expectations in the next six months, which rose to 30 this month. Meanwhile, the index gauging traffic of prospective buyers gained three points to 16 and the index gauging current sales conditions held unchanged at 16.

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