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Homebuilder confidence improves, gradual gains expected in 2012

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Homebuilder confidence in the market for new single-family homes rose by three points to 20 on the National Association of Home Builders/Wells Fargo (WFC) housing market index for November, the second consecutive monthly gain. The NAHB said the number builds on a revised three-point increase in October, and brings the confidence gauge to its highest level since May 2010. The trade group also predicted more gains next year. "While this second solid monthly gain on the builder confidence scale is encouraging, the overall measure remains quite low due to the many challenges that homebuilding continues to face with regard to the high number of foreclosures, the difficulties of obtaining construction financing and accurate appraisals, and the restrictive lending environment that is discouraging potential buyers," said Bob Nielsen, NAHB chairman and a homebuilder from Reno, Nev. NAHB Chief Economist David Crowe said some buyers are being tempted back to the market by affordable prices and low interest rates. "We are anticipating further, gradual gains in the builder confidence gauge heading into 2012 due to these pockets of improving conditions that are slowly spreading," Crowe said. The index 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. 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. The component gauging current sales conditions rose three points to 20 — its highest level since May 2010 — while the component gauging future sales expectations rose two points to 25 — its highest level since March.  The component gauging traffic of prospective buyers rose one point to 15, its highest since May 2010. Write to Kerry Curry. Follow her on Twitter @communicatorKLC.

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