Home Builder Confidence Continues Improving in December

Builder confidence for new single-family homes in the market rose for an eighth consecutive month, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

In December, builder confidence reached a level of 47, marking a two-point gain from the prior month’s reading. This is also the highest level the index has reached since April 2006.

David Crowe, chief economist for NAHB, noted that this upward trend in builder optimism is similar to the gradual recovery taking place throughout housing markets nationwide and he expects this to continue in 2013.  

“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,” said Barry Rutenberg, chairman of NAHB and a home builder from Gainesville, Fla.

Last month, an economist at IHS Global Insight said builder demand is only going to increase as the excess supply of homes and REO properties built during the last housing boom has been reduced. 

Two of the three housing market index components recorded scores above 50, which indicates that more builders view sales conditions as “good” rather than “poor.” The component measuring traffic of prospective buyers increased one point from the prior month to a score of 36. 

“One thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today’s overly stringent lending standards,” Rutenberg stated.