Builders’ Confidence at Highest Level in Four Years

The National Association of Homebuilders (NAHB) reported today that the NAHB/Wells Fargo Housing Market Index (HMI) increased for the fifth consecutive month to a February reading of 29, up from 25 in January. NAHB’s chairman noted:

Builder confidence has doubled since September as measured by the HMI. Given the recent improvements in new home starts and the increasing number of markets included in the NAHB/First American Improving Markets Index, this consistency suggests that the housing market is moving toward more sustainable growth.

As has been the case with housing statistics though, some caution is required the group’s chief economist said:

[I]t is important to remember that the HMI is still very low, and several factors continue to constrain the market. Foreclosures are still competing with new home sales, and many builders are seeing appraisals come in at less than the cost of construction. Additionally, prospective home buyers are finding it difficult to qualify for a mortgage.

The same combination of problems have plagued the market for some time now, and while there has been some improvement, the housing market is still suffering.