Builder Confidence Highest Since 2006, Mortgage Strife Drags on Recovery

Rising for the eighth consecutive month in December to a level of 47 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), builder confidence reaches the highest peak the index has seen in six years. 

Builder confidence, though only rising two points since November, is indicative of the housing market’s gradual recovery nonetheless, notes NAHB Chief Economist David Crowe. 

“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 from Gainesville, Florida. 

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A central focus that has been dragging the market’s recovery, Rutenberg notices, is the difficulty many families face in qualifying for a mortgage under today’s stringent lending standards. 

Gauging builder perceptions of single-family home sales and sales expectations for the next six months, NAHB’s index ranks on the basis of “good,” “fair,” or “poor.” The survey also ranks builders’ traffic rate as “high to very high,” “average,” or “low to very low.”

Scores from each of the index’s components ranking over 50 determine whether builders perceive sales conditions as good rather than bad. 

Two of HMI’s three component indexes scored over 50. Current sales expectations rose two points to 51 in December, despite future sales expectations for the next six months fell one point to 51.

The third component measuring traffic of prospective buyers rose by a point to 36.

Written by Jason Oliva

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