New Homes: Builders (Slightly) More Confident


Signs of improvement in the new homes market made an unexpected appearance this morning. The National Association of Home Builders/Wells Fargo housing market index increased 3 points, to 16, in October, meeting the level reached in June. Many economists expected the index to remain flat at 13. The index measures builder confidence related to newly built, single-family homes.

The rise reflects an increase in interest among potential homebuyers for sales of new homes in the coming months. As far as regions, the South and the West registered 4-point index gains; the Northeast and Midwest clocked 1-point gains. Possible hurdles include builders' inability to acquire credit for building homes and "competition from foreclosures, inaccurate appraisals, and general consumer uncertainty about the economy and job market," according to the NAHB.

To put things into perspective, any index number over 50 signals that more builders consider conditions good rather than poor. By that measure, builder confidence has a long, long way to go. (Click on "Full Story" to see a full-size version of the chart.)