Home-Builder Confidence Index Up For October

Home-Builder Confidence Index Up For October Builder confidence in the market for newly built, single-family homes rose four points to 18 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) for October – the largest one-month gain the HMI has seen since the home buyer tax credit program helped spur the market in April 2010.

‘Builder confidence regained some ground in October due to modest improvements in buyer interest in select markets where economic recovery is starting to take hold and where foreclosure activity has remained comparatively subdued,’ says NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. ‘That said, confidence remains quite low as builders continue to confront overly restrictive lending policies that are discouraging prospective buyers, problems with new-home appraisals and widespread uncertainty regarding federal support for homeownership.’

The NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as ‘good,’ ‘fair’ or ‘poor.’ The survey also asks builders to rate traffic of prospective buyers as ‘high to very high,’ ‘average’ or ‘low to very low.’ 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 indices recorded substantial gains in October. The component gauging current sales conditions rose four points to 18, while the component gauging sales expectations in the next six months rose seven points to 24 and the component gauging traffic of prospective buyers rose three points to 14.

Regionally, the West led all other areas of the country with its nine-point gain to 21 – the highest HMI score for that region since August 2007. The Midwest and South each recorded four-point gains, to 15 and 19, respectively, while the Northeast held unchanged at 15.

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