Real Estate

Builder confidence reaches highest level since 2006

Builder confidence in new single-family homes jumped two points to 47 month-over-month in December, according to an index released Tuesday by the National Association of Home Builders and Wells Fargo (WFC). This marks the highest level the index attained since April 2006.

“Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market,” observed NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla.

Two of the three component indexes broke above the critical midpoint of 50. Current sales expectations rose two points to 51 this month, while sales expectations in the next six months fell one point to 51. The component measuring traffic of prospective buyers increased one point to 36.

“Home builder sentiment has been steadily increasing in recent months, a trend that has been mirrored by other indicators of housing activity,” said analysts at Barclays. “We continue to look for a print of 880k in tomorrow’s housing starts release for November, which would be less than half of the 1821k pace the last time that the NAHB index reached these levels in April 2006.”

According to Econoday, regional data showed a sharp increase in the Northeast, likely due to Hurricane Sandy, and even distribution and very strong gains across the other regions. The Midwest showed the greatest strength with a reading at 53, the only region over 50. More than 50 indicates more builders are confident than cautious.

“As supplies of foreclosure and for sale properties continues to decline, and availability of mortgage capital matches the attractiveness of interest rates I am confident that we will see the homebuilding industry enter a high growth phase,”  said John Tashjian, principal of Centurion Real Estate Partners.

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