Home builder confidence took a small step forward in January but still remains mired in gloom according to a report released by the National Association of Home Builders (NAHB) on Wednesday afternoon. The NAHB/Wells Fargo Housing Market Index (HMI) for current sales conditions for single-family homes rose a single point to 19 in January following a downwardly revised rating of 18 (a record low) in December. January's confidence indicator of 19 matches October's and November's HMI.
The report also revealed that sales expectations for the next six months rose two points to 28 and the index gauging traffic of prospective buyers rose one point to 14.
The NAHB/Wells Fargo HMI, which was first introduced in January 1985, measures builder perceptions of current single-family home sales and sales expectations for the next six months as good, fair, or poor on a monthly basis. In addition, the survey asks builders to rate traffic of prospective buyers as either high to very high, average to very low. Scores are then used to calculate a seasonally adjusted index.
January's HMI indicates that builders have little doubt that the battered housing market will change anytime before the summer.
"Builders are anticipating a time when market conditions will support an upswing in building activity - most likely in the second half of 2008," said NAHB Chief Economist David Seiders.
"Builders are taking a realistic view of the continuing housing market correction and doing what they should to get inventories under control and restore greater balance to the supply and demand equation," added NAHB President Brian Catalde.
Regionally, the HMI was unchanged at 20 in the Northeast, increased two points to 17 in the Midwest, jumped three points in the South to 23, and dipped five points to a record-low 13 in the West.