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Builder Confidence Index Stalls after Eight Months of Improvement

by devteam January 16th, 2013 | Share

Following eight consecutive months ofrnincreases the National Association of Home Builders (NAHB)/Wells Fargo HousingrnMarket Index (HMI) held steady in January. rnThe current level of 47 remains the highest point for the Index sincernApril 2006.</p

The HMI is compiled from responses to arnsurvey conducted monthly by NAHB in which its home-builder members are asked tornrate their current perceptions of buyer activity and what they expect it to be sixrnmonths hence as “good,” “fair,” or “poor.” rnThey are also asked to rate current traffic of buyers as “high tornvery high,” “average” or “low to very low.”   Scoresrnfrom each component are used to calculate a seasonally adjusted index where anyrnnumber over 50 indicates that more builders view conditions as good than poor.</p

The index’s components were mixed inrnJanuary. The component gauging current sales conditions remained unchanged atrn51. Meanwhile, the component gauging sales expectations in the next six monthsrnfell one point to 49 and the component gauging traffic of prospective buyersrngained one point to 37.</p

The HMI three-month moving average wasrnup across all regions, with the Northeast and Midwest posting a two-point gainrnto 36 and 50, respectively. The South registered a three-point gain to 49 andrnthe West posted a four-point increase to 51.<br / <br /"Conditions in the housing market look much better now than at thernbeginning of 2012 and an increasing number of housing markets are showing signsrnof recovery, which should bode well for future home sales later thisrnyear,” said Barry Rutenberg, chairman of the National Association of HomernBuilders (NAHB).   “However, uncertainties stemming fromrnlast month’s fiscal cliff negotiations contributed to the pause in builderrnconfidence and continuing discussions among policymakers related to spendingrncuts and the future of the mortgage interest deduction could put a damper onrnhousing demand in the coming months.”<br /<br /"Builders' sentiment remains very close to the index's tipping point ofrn50, where an equal number of builders view conditions as good and poor, andrnfundamentals indicate continued momentum in housing this year," said NAHBrnChief Economist David Crowe. "However, persistently tight mortgage creditrnconditions, difficulties in obtaining accurate appraisals and the ongoingrnstalemate in Washington over critical economic concerns continue to impede thernhousing recovery.”</p

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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