Builder Confidence Rises With Hope for Spring

“Cautiously optimistic” seems to be the phrase of the moment in the home building industry. And based on the latest NAHB/Wells Fargo Housing Market Index numbers, it captures well the mood of builders, who have hope for the spring selling season even while memories of last year’s false start remain fresh in their minds. After four months of a stagnant reading at 16, builders cautiously inched the index measuring confidence in the single-family new home market up a point in March. The reading marks the highest level since last May, when the home buyer tax credit was still in place. “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,” Bob Nielsen, the NAHB’s chairman said in a statement announcing the index’s new numbers. “However, the same factors that have been weighing down the market are still very much in play, particularly competition from short sales and foreclosures, consumers’ inability to sell their existing homes, 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.” Driving the improvement in confidence was hope for the near future. While two of the index’s three components stayed stationary—current sales conditions at 17 and prospective buyer traffic at 12—the component measuring sales expectations over the next six months rose two points to 27. On a regional basis, the largest jump was in the West, with an increase of four points from February, achieving a reading of 17 in March. The South also saw an increase of two points to come in at 20 for the month. While the Northeast tied with the South for first place with a reading of 20, that number was a one-point decrease for the region on a monthly basis. The Midwest remained unmoved, at 12.

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