Home Builder Confidence Highest Since September

Washington, DC, July 17, 2009--Home builder confidence in the market for new, single-family homes notched up two points in July to its highest level since September, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

The HMI rose two points to 17 in July as builders saw an improvement in current sales conditions but continued to express concerns about the future.
 
“Builders are seeing slightly better sales conditions this month as consumers take advantage of the first-time buyer tax credit, low interest rates and attractive home prices, but many remain quite concerned about the road that lies ahead,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.

“A true recovery in the housing market and overall economy cannot take place until the continuing foreclosure crisis is abated and a decent flow of credit is restored to housing production. Meanwhile, the stalled jobs market is a major concern to builders and potential home buyers alike.”
 
NAHB Chief Economist David Crowe noted that although the HMI helps confirm the market is bouncing around a bottom, the gain was entirely contained in the component gauging current sales conditions, while the component gauging sales expectations for the next six months remained virtually flat for a fourth consecutive month.

“Builders recognize the recovery is going to be a slow one and that we are facing a number of substantial negative forces,” Crowe said.

He said that a quarter of all new-home sales are falling through due to appraisal issues that are tied to the use of distressed and foreclosed properties as comps.

“This is a tremendous obstacle for a housing market that is struggling to get back on its feet, as is the lack of available credit for acquisition, development and construction financing.”
 
Regionally, the South posted the biggest HMI gain, with a 5-point increase to 20. The Northeast posted a three-point decline, to 16, while the Midwest and West were each unchanged, at 14 and 15, respectively.