Another indication that the nearrnfuture of home building isn’t all that grim comes from the mostrnrecent NAHB/Wells Fargo Home Home Market Index survey. The survey, arnmeasure of builder confidence in the market, moved significantly tornthe positive, crossing over the benchmark score of 50 which indicatesrnmore builders view the market as good than view it as poor. This wasrnabove analysts’ expectations and was the first time since Januaryrnsuch a score had been reached and builders also expressed optimismrnfor future sales. It was only builders’ attitudes about currentrntraffic, still well below the milestone level, that showed lack ofrnconfidence from those on the front line. </p

(Read More: Homebuilder Confidence Back Into Positive Territory)</p

Joseph Hogue, writing in Motley Fool<span style="font-style: normal"the day before the Horton and Pulte financials were released said the recent drop in stock prices for most home builders over the lastrnmonth was the result of a report (which he attributed to NationalrnAssociation of Home Builders but it was actually Census Bureaurnconstruction data) showing a surprise drop in home construction inrnJune. Permits issued during the month declined by 4.2 percent torn963,000 units (a seasonally adjusted annual figure) and housingrnstarts were down by over 9 percent to 575,000 units. </p

(Read More: Housing Starts Fall Enough to Break 3yr Trend of Improvement)</p

Hogue pointed out that the weakness in construction data wasrnalmost entirely due to a near 30 percent drop in starts in thernsouthern region; surprising because of the relative strength of thatrnregion in recent months. He asks whether that anomaly might just bernthe result of a bad month of collecting and reporting data in onernregion. Even if correctly reported, he said, there is a strongrnpossibility that there will be a rebound in next month’s data as thernlong term fundamentals look promising. He, in fact feels so stronglyrnthat the data for the south might be incorrect and thus negativelyrnskewing the national data, that he spent considerable ink laying outrnand justifying that premise.</p

Hogue consludes that, “Whether June construction data ultimately proves an error or not,rnthere is good reason to believe that home builder shares have upsidernpotential. July data for new starts could show a rebound and therndeficit in new construction should support building for severalrnyears”

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