Homebuilder Sentiment Rose in December
After revising November’s housing market index from 20 to 19, the National Association of Home Builders reported it reached 21 in December—the highest point since May 2010. Despite the November revision, the index still increased for three straight months. It hasn’t done that since the middle of 2009.
What does this mean? Considering economists were expecting a 20, the surprise increase is a good sign that the housing market is seeing some areas of recovery. Still, the index has been in negative territory (below 50), where more builders see conditions as poor, rather than good, since April of 2006—and it will likely take an extended recovery to see a positive confidence reading again.
All three components of the builders’ index increased. Traffic from potential buyers jumped three points, while sales expectations for the next six months and builders’ assessment of current sales conditions also grew.
Foreclosed properties continue to bring down many markets. Meanwhile, consumer worries about the job market and selling existing homes are keeping many potential homebuyers from starting the building process. However, the 477 builders surveyed indicate they’ve seen more interest and inquiries in December than in previous months.
The South saw a four-point gain, from 21 to 25, while the West increased by one point. The Midwest index was unchanged, while the Northeast fell one point.