Nation's builders predict rebound in housing

SUGGESTING stabilizing conditions in the nation's single-family housing market, home builder confidence has edged up, according to a report in late 2006 by the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.

“More and more builders are seeing light at the end of the tunnel,” said NAHB President David Pressly, a home builder from Statesville, North Carolina. “Our members are telling us that the market is steadying after a significant downward correction. On the demand side, we look for sales to stabilize and gradually move up in the coming months.”

“With home prices leveling off, mortgage interest rates remaining near historic lows, energy prices declining and the economy continuing to generate solid growth in employment and household income, affordability is now on the mend and many consumers recognize that home buying conditions have improved,” said NAHB Chief Economist David Seiders.

Derived from a monthly survey that NAHB has been conducting for almost 20 years, the NAHB/Wells Fargo HMI 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 either “high to very high,” “average,” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

All three component indexes moved higher in November 2006, including a one-point gain in the current sales index, to 33. The component gauging sales expectations for the next six months rose four points to 46 and the component gauging traffic of prospective buyers moved up three points from last month, to 26.

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