Realty Check

Home Builder Sentiment Posts Biggest Gain in Over Year

Despite sluggish summer sales, confidence among the nation's home builders is gaining strength, posting its largest gain since April 2010, when the now-expired home buyer tax credit brought more buyers into the market.


Confidence on the National Association of Home Builder's monthly sentiment index jumped 4 points to 18. Fifty, however, is still the line between positive and negative sentiment.

“Builder confidence regained some ground in October due to modest improvements in buyer interest in select markets where economic recovery is starting to take hold and where foreclosure activity has remained comparatively subdued,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev.

“That said," he added, "confidence remains quite low as builders continue to confront overly restrictive lending policies that are discouraging prospective buyers, problems with new-home appraisals and widespread uncertainty regarding federal support for homeownership."

The biggest jump in confidence came in the component of the index gauging future sales expectations, which rose seven points. Buyer traffic and current sales improved, but not quite as dramatically.

The biggest surge came from builders out West, who posted their highest confidence since 2007. Builder sentiment in the Northeast was unchanged.

While this monthly survey has many builders moving from the "poor" to "fair" category, they haven't moved to "good" yet. Builders still cite competition from foreclosures, pressure on home prices, and high material costs as big barriers to real improvement in the home building market.

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