Builder confidence edged up slightly in March, rising one point on the National Association of Home Builders/Wells Fargo Housing Market Index. The slight increase in confidence follows four consecutive months at the same level, and represents its highest level since May 2010, when the federal home buyer tax credit program came to a close.
“Builders are cautiously looking forward to the spring home buying season in hopes that improving economic conditions will help bring more buyers to the table,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “However, the same factors that have been weighing down the market are still very much in play, particularly competition from short sales and foreclosures, consumers’ inability to sell their existing home, appraisals that are coming in below construction cost due to the inappropriate use of distressed properties as comps, and restrictive lending conditions for both buyers and builders.”
NAHB has been conducting the survey for more than 20 year and allows builders to express home sales and expectations for the next six months as “good,” “fair,” or “poor.” While two of the three main index components held steady in March, the third, which gauges sales expectations in the next six months, rose to its highest level since May 2010.
“Prevailing indicators portend some improvement in the overall economy, which should generate modest housing market gains later this year,” said NAHB Chief Economist David Crowe. “Unfortunately, most small builders report that they are no more able to obtain credit for new construction today than they have been in the past year, and this is a major impediment that is keeping them from putting their crews back to work.”
Written by Elizabeth Ecker