Home Builder Confidence Holds at 7-Year High; Tight Credit Persists

Home Builder Confidence Holds at 7-Year High; Tight Credit PersistsHome-builder confidence in the market for new single-family homes was unchanged in January, remaining at a level of 47 which is the highest level since April 2006.
The closely-watched index from the National Association of Home Builders and Wells Fargo is close to the tipping point of 50, where an equal number of builders view conditions as good and poor. Any point above 50 represents conditions as good.
“Conditions in the housing market look much better now than at the beginning of 2012 and an increasing number of housing markets are showing signs of recovery, which should bode well for future home sales later this year,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.
However, uncertainties stemming from the “fiscal cliff” end-of-year negotiations contributed to the pause in builder confidence, he said.
Continuing “debt ceiling” discussions in Washington related to spending cuts and the future of the mortgage interest deduction “could put a damper on housing demand in the coming months,” Rutenberg said.
The uncertainty out of Washington joins persistently tight mortgage-credit conditions and difficulties in obtaining accurate appraisals as the biggest factors contributing to a more robust, according to the NAHB.
The NAHB/Wells Fargo index’s components were mixed in January. The component gauging current sales conditions remained unchanged at 51. Meanwhile, the component gauging sales expectations in the next six months fell one point to 49 and the component gauging traffic of prospective buyers gained one point to 37.

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