Homebuilder confidence rises with outlook not quite as bleak

by JASON PHILYAW

Homebuilder optimism bounced back this month as some markets show deal-seeking consumers coming to market, according to the latest National Association of Home Builders index.

The NAHB and Wells Fargo (WFC: 26.88 -1.10%) surveys builders to gauge perceptions of the new, single-family home market for the next six months. A score higher than 50 indicates more builders view the market as good than poor. The index rose two points to 15 for July after falling three points to 13 the prior month. The index has stayed within a three-point range for nine of the past 10 months.

NAHB Chairman Bob Nielsen said increasing builder confidence "is a positive sign that the outlook perhaps isn't quite as bleak as was feared in June."

"While builders continue to confront serious challenges with regard to competition from foreclosed properties that are priced below replacement cost, inaccurate appraisals of new homes, and a very restrictive lending environment for new home construction, select markets are showing gradual improvement as consumers begin to take advantage of very favorable buying conditions," Nielsen said.

The part of the survey that gauges expectations of sales over the next six months rose seven points to 22, while the component that tracks prospective buyers remained flat with June at 12.

David Crowe, chief economist for the NAHB, said expectations of stronger sales in the back half of the year coupled with July's gain indicate "a return to trend."

"Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve," Crowe said.

URL to original article: http://www.housingwire.com/2011/07/18/homebuilder-confidence-rises-with-outlook-not-quite-as-bleak

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