Homebuilders' confidence in the market for newly built single-family homes remained steady in the latest report from the National Association of Home Builders (NAHB) and Wells Fargo. They reported today a preliminary single-family homebuilder confidence reading for November of 54, which is unchanged from the downwardly revised level seen in October in the Housing Market Index (HMI). The reading of the HMI over the previous year is available in the chart below:
The HMI is a monthly survey of single-family homebuilders that measures how the builders feel about current home sales as well as their expectations over the next six months. A reading above 50 indicates that more builders believe that conditions are favorable relative to those who feel they are not. The index has stayed above 50 now for six straight months after being below that level since May 2006.
NAHB Chairman Rick Judson attributed some of the unease in the most recent month to the political climate in Washington noting in a statement that "given the current interest rate and pricing environment, consumers continue to show interest in purchasing new homes, but are holding back because Congress keeps pushing critical decisions on budget, tax and government spending issues down the road." Judson also highlighted that builders face difficulties as a result of the rising cost of construction and lower appraisals.
Builder confidence was mixed across the four regions of the United States, with builders in the Northeast being the most apprehensive with a reading of 44, and those in the West being the most optimistic with a reading of 58. However the reading of 44 in the Northeast was a marked improvement over the 30 reading in the previous month. The Midwest saw a month-to-month decline, with its HMI level falling from 62 to 54. The South moved up one point to 55.
The NAHB said the HMI index gauging current sales conditions in November held steady at 58. The component measuring expectations for future sales fell one point to 60 and the component gauging traffic of prospective buyers dropped one point to 42.
"Policy and economic uncertainty is undermining consumer confidence," noted NAHB Chief Economist David Crowe in the press release. "The fact that builder confidence remains above 50 is an encouraging sign, considering the unresolved debt and federal budget issues cause builders and consumers to remain on the sideline."
-- Material from The Associated Press was used in this report.