Builder confidence in the market for new single-family homes edged marginally higher in February as home buyer traffic through model homes improved considerably, according to the latest NAHB/Wells Fargo Housing Market Index (HMI).
The HMI rose a single point to 20 this month, still close to its December 2007 historic low reading of 18.
"While builders remain very cautious about the outlook for new-home sales given today's economic environment, the fact that more consumers appear to be checking out their options is a good sign," said Sandy Dunn, the NAHB's newly elected 2008 president.
Derived from a monthly survey that NAHB has been conducting since January 1985, the HMI gauges builder perceptions of current single-family home sales and expectations for the next six months as either "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.
"Builders know there's a difference between people looking and people buying, and their current outlook remains quite subdued," said David Seiders, NAHB's chief economist.
The last time the HMI was above 50 was in April 2006 when the HMI was 51. The HMI reached 71 in December 2004, one of the peak years of the housing boom.
HMI tables can be accessed at www.nahb.org/hmi.