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Builder confidence in the market for newly built, single-family homes improved by one point in March to 17 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest level since May 2010, when the survey period corresponded with the final days of the federal home buyer tax credit program.
"While many home buyers are still holding off on making a purchase, builders did indicate slightly increased optimism about the future with a two-point gain in the HMI component gauging sales expectations for the next six months," said NAHB chief economist David Crowe. "In fact, prevailing indicators portend some improvement in the overall economy, which should generate modest housing market gains later this year.
“Unfortunately, most small builders report that they are no more able to obtain credit for new construction today than they have been in the past year, and this is a major impediment that is keeping them from putting their crews back to work,” he added.
The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
Two out of three of the HMI's component indexes were unchanged in March, including the component gauging current sales conditions, which held at 17, and the component gauging traffic of prospective buyers, which held at 12. The component gauging sales expectations in the next six months rose two points to 27, its highest level since May 2010.
Regionally, HMI results were mixed. The Northeast posted a one-point decline to 20, the Midwest was flat at 12, the South gained two points to 20, and the West gained four points to 17.