Confidence rising for house builders
Confidence among U.S. house builders rose this month to the highest since September as sales of single-family units increased and more prospective buyers expressed interest.
The National Association of Home Builders/Wells Fargo index of builder confidence rose to 17 this month from 15 in June, the Washington-based NAHB said Thursday. A reading below 50 means most respondents view conditions as poor.
Lower house prices and tax credits have helped the housing industry stabilize after almost four years of decline. Combined sales of existing and new houses climbed to a 5.1 million annual pace in May, the highest level so far this year. Economists are incorporating an easing in the housing slump in their forecasts of an economic recovery in the second half of 2009.
"Builders are seeing slightly better sales conditions this month as consumers take advantage of the first-time buyer tax credit, low interest rates and attractive home prices," NAHB Chairman Joe Robson said in a statement. At the same time, he said, "many remain quite concerned" about competing with foreclosed properties and a lack of available credit for some potential buyers.
The builder confidence index was forecast to increase to 16 this month, according to the median estimate of 46 economists surveyed by Bloomberg News. The gauge, which fell to a record low of 8 in January, averaged 16 in 2008 payday loans. It was first published in January 1985.
The survey asks builders to characterize current sales as "good," "fair" or "poor" and to gauge prospective buyer traffic. It also asks participants to assess the outlook for the next six months.
The builder group’s index of current single-family house sales rose to 17, the highest since September, from 14 last month. The gauge of buyer traffic increased to 14, also the highest since September, after holding at 13 for three months. A measure of sales expectations for the next six months held at 26 for a second month, after readings of 27 in May and 24 in April.
"The component gauging sales expectations for the next six months remained virtually flat for a fourth consecutive month," David Crowe, chief economist at NAHB, said in a statement. "Builders recognize the recovery is going to be a slow one and that we are facing a number of substantial negative forces."
Confidence increased in one of the four regions, rising to 20 in the South from 15 in June. It held steady at 15 in the West and at 14 in the Midwest, falling to 16 from 19 in the Northeast.