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After four consecutive months hovering at the same low level, builder confidence in the market for newly built, single-family homes improved by a single point in March, rising to 17 on the NAHB/Wells Fargo Housing Market Index (HMI).
This is the highest level the HMI has reached since May 2010, when the survey period corresponded with the final days of the federal home buyer tax credit program.
"Builders are cautiously looking forward to the spring home buying season in hopes that improving economic conditions will help bring more buyers to the table," said NAHB Chairman Bob Nielsen.
"However, the same factors that have been weighing down the market are still very much in play,” he said, “particularly competition from short sales and foreclosures, consumers' inability to sell their existing home, appraisals that are coming in below construction cost due to the inappropriate use of distressed properties as comps, and restrictive lending conditions for both buyers and builders."
"While many home buyers are still holding off on making a purchase, builders did indicate slightly increased optimism about the future, with a two-point gain in the HMI component gauging sales expectations for the next six months," added NAHB Chief Economist David Crowe.
"In fact,” Crowe said, “prevailing indicators portend some improvement in the overall economy, which should generate modest housing market gains later this year."
But, he added, "Most small builders unfortunately report that they are no more able to obtain credit for new construction today than they have been in the past year, and this is a major impediment that is keeping them from putting their crews back to work."
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers.
Any number over 50 indicates that more builders view sales conditions as good than poor.
Two of the three HMI component indexes held unchanged in March — including current sales conditions, at 17, and prospective buyer traffic, at 12. Sales expectations in the next six months rose two points in March to 27, its highest level since May 2010.
Regionally, HMI results were mixed in March — with a one-point decline to 20 in the Northeast, the Midwest flat at 12, a two-point increase to 20 in the South and a four-point increase to 17 in the West.
The NAHB Spring Construction Forecast Webinar will provide attendees with up-to-the-minute analysis of the latest housing numbers and market trends right to their desktop. The webinar will be held from 2:00-4:00 p.m. EDT on Wednesday, April 27.
Speakers David Crowe, NAHB chief economist; Mark Zandi, chief economist with Moody's Analytics; and Robert Denk, NAHB’s assistant vice president for forecasting and analysis, will address issues affecting the housing industry and the economy — including competition from short sales and foreclosures, consumers' inability to sell their existing homes, appraisals coming in below construction costs, and restrictive lending conditions for buyers and builders — and how builder confidence and the market may evolve as those factors change.
The fee is $29.95 for NAHB members and home builders associations and $49.95 for non-members.
For more information and to register, visit www.nahb.org/cfw.
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