Builder confidence in the market for newly built, single-family homes continued to climb for a fourth consecutive month in January, rising four points to 25 on the NAHB/Wells Fargo Housing Market Index (HMI), which was released on Jan. 18.

The index rose in January to its highest level 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 NAHB Chairman Bob Nielsen.

"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,” Nielsen said.

“Policymakers must now take every precaution to avoid derailing this nascent recovery," he added.

"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.

Even so, he 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."

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.

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. 

Each of the HMI's three component indexes in January registered a fourth consecutive month of improvement:

• The component gauging current sales conditions rose three points to 25, which was its highest point since June of 2007.
  
  
• Sales expectations in the next six months also rose three points — to 29 — to the highest level since September 2009.
  
  
• Traffic of prospective buyers was up three points — to 21 — its highest since June of 2007.

The HMI posted gains in all four regions in January, rising nine points to 23 in the Northeast, one point to 24 in the Midwest, two points to 27 in the South and five points to 21 in the West.

Subscribe to the Free Eye on Housing Blog

For in-depth analysis of the latest housing statistics and research from the federal government, NAHB and other sources, Eye on the Economy readers are encouraged to visit Eye on Housing at http://eyeonhousing.wordpress.com/.

They can also subscribe to the blog’s free RSS feed, which will automatically alert them to every new posting.

Data You Can Build On

Get historical data, industry analysis and the latest forecasts, including state and metro, from HousingEconomics.com. Support your business decisions with in-depth analyses, detailed Excel tables, overviews and more. For more information, visit HousingEconomics.com.