News of increased builder confidence in the first month of 2013 set the tone for what is to come regarding new home sales in the new year, and the latest National Association of Home Builders/Wells Fargo Housing Market Index revealed confidence levels were similar in February.
According to the report, the index slipped just one point to 46 from the previous month. Last year proved to be a strong year for improved optimism, as noted by NAHB chairman Rick Judson who credited the slight decline to uncertainty regarding job opportunities and buyer capabilities of obtaining a mortgage.
High sales of existing home sales and elimination of many large delinquent inventories have prompted more prospective buyers to purchase or build a new home, which has increased business and the confidence of buyers. Despite the holt in moving forward seen in February, the HMI is still at the highest seen in over six years.
"Having risen strongly in 2012, the HMI hit a slight pause in the beginning of this year as builders adjusted their expectations to reflect the pace at which consumers are moving forward on new-home purchases," said David Crowe, chief economist for NAHB. "The index remains near its highest level since May of 2006, and we expect home building to continue on a modest rising trajectory this year."
When focusing in on sales expectations for the coming six months, real estate records from NAHB revealed that sales predictions increased to 50 though traffic of potential buyers fell four points bringing the individual index to 32.
Different regions post varying HMIs
In the Northeast, the HMI increased to 39, up three points from the month before while the West saw a four-point improvement bringing the index to 55. Both the South and the Midwest posted declines, though both regions' HMIs only fell by two points to 47 and 48.
The gains and minor declines in confidence suggests a more widespread improvement to builder confidence, which will likely post overall increases throughout the remainder of the year, especially with the busier months from home buying just around the corner. Economic factors will also continue to influence builder confidence, while consumers also post increased optimism when the economy is stable.