According to the National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence increased in November.
Given that numbers were skewed by the home buyer tax credit, this month’s reading is the best the index has seen since April 2008, according to Patrick Newport, U.S. economist at IHS Global Insight.
While each of the index’s three components improved from October, the individual readings seemed contradictory.
While the component measuring future sales expectations reported the highest reading, jumping two points to 25, the component gauging prospective buyer traffic had the lowest reading, gaining one point to come in at 15.
The component gauging current sales conditions gained three points to a reading of 20.
The index requires a reading of over 50 to indicate that a majority of builders see conditions as good rather than poor.
David Crowe, NAHB’s chief economist, stated “I think what’s happening is the traffic that is coming in seems to be of a higher likelihood of buying,” he said on a call with Builder today. “The builders are starting to see more serious buyers.”
The trend has also shifted away from first-time buyers as builders are reporting more move-up customers, according to Crowe.
On a regional level, the index saw a three point gain to 17 in the Northeast, which is an eight point gain to 23 in the Midwest, a two point gain to 21 in the South, and a six point drop to 15 in the West.
Source: builderonline.com