Builder Confidence Holds Steady in January

Homebuilders remain optimistic that a housing recovery will continue to take shape this year, according to data from the latest National Association of Home Builders/Wells Fargo housing market index.

For the second straight month, builder confidence for newly built, single-family homes was 47 in January. This means that following eight consecutive monthly gains, the index continues to hold at its highest level since April 2006.

“Conditions in the housing market look much better now than at the beginning of 2012 and an increasing number of housing markets are showing signs of recovery, which should bode well for future home sales later this year,” said Barry Rutenberg, chairman of the National Association of Home Builders, who is a homebuilder from Gainesville, Fla.

“However, uncertainties stemming from last month’s fiscal cliff negotiations contributed to the pause in builder confidence and continuing discussions among policymakers related to spending cuts and the future of the mortgage interest deduction could put a damper on housing demand in the coming months.”

The components analyzed in this index had mixed results in January. The segment gauging builder perceptions of current single-family home sales remained unchanged month-over-month at 51. Meanwhile, the component gauging sales expectations for the next six months fell one point to 49. Lastly, there was a one point gain to 37 in the component where builders project possible traffic of prospective buyers.

Any component that contains a number over 50 indicates that more builders view conditions as good than poor.

Additionally, the HMI three-month average was up across all regions, with the Northeast and Midwest posting a two point gain to 36 and 50, respectively. The South registered a three point gain reaching 49 and the West posted a four point increase now at 51.

“Builders’ sentiment remains very close to the index’s tipping point of 50 and fundamentals indicate continued momentum in housing this year,” said David Crowe, chief economist at NAHB. “However, persistently tight mortgage credit conditions, difficulties in obtaining accurate appraisals and the ongoing stalemate in Washington over critical economic concerns continue to impede the housing recovery.”