Builder Sentiment Holds Steady in February

Washington, DC, Feb. 15, 2011 -- Homebuilder confidence remained unchanged at 16 for a fourth consecutive month in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

A reading over 50 indicates that builders see conditions as good.

"While builders are starting to see more interest among potential home buyers, we are also dealing with a multitude of challenges, including competition from foreclosure properties and inaccurate appraisals of new homes, which are limiting our ability to sell," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.

"On top of that, an extremely tight lending environment continues to make it almost impossible to obtain credit for viable new and existing projects, and most do not see that situation improving anytime soon."

On a positive note, two out three of the HMI's component indexes edged slightly higher in February. The component gauging current sales conditions improved by two points to 17, while the component gauging sales expectations in the next six months rose a single point, to 25. Meanwhile, the component gauging traffic of prospective buyers held unchanged, at 12.

"Builders are telling us that some pockets of optimism have begun to emerge, but many prospective purchasers are concerned about selling their existing home in the current market, or face difficulty securing credit for a home purchase -- even when they are well-qualified," said NAHB Chief Economist David Crowe.

"Adding these concerns to the severe difficulty that builders continue to confront in obtaining acquisition, development and construction financing, you can understand why builder sentiment has not improved over the past four months."