Builder Confidence Remains Unchanged In January

by Houston Agent

Despite an encouraging forecast from panelists at the NAHB’s International Builders’ Show last week, a recent survey by the organization reveals that builder confidence at the time remains relatively low.

Woman Resting on Construction Site

Image by Noel Hendrickson/Corbis

According to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), confidence in the market for newly built, single-family homes held unchanged at a level of 16 for a third consecutive month in January.

“As we emerge from the traditionally slow holiday season, builders continue to look for signs of improvement in the economy, homebuyer demand and builder and consumer credit conditions,” says 2011 NAHB Chairman Bob Nielsen, a homebuilder from Reno, Nev. “Unfortunately, a severe lack of construction financing, and widespread difficulties in obtaining accurate appraisal values, continue to limit builders’ ability to prepare for anticipated improvements in buyer demand in 2011.”

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

While the HMI components gauging current sales conditions and sales expectations for the next six months both held steady from the previous month, at 16 and 25, respectively, the component gauging traffic of prospective buyers edged up a single point to 12 in January.

HMI scores rose by one point in the Midwest and four points in the West in January, to 14 and 15, respectively. Meanwhile, HMI scores fell two points in the Northeast and one point in the South, to 20 and 17, respectively.

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