Home builders grew a bit more optimistic in February, even if they are still wary of the continuing malaise in the housing market. The National Association of Home Builders/Wells Fargo Housing Market Index rose a single percentage point to 20 this month, up a point from January and two points from an historic low in December. A reading above 50 indicates a favorable view of market conditions.
The index of builder sentiment regarding current sales conditions for single-family homes also rose one point to 20, while the index gauging sales expectations for the next six months declined one point to 27. Significantly, as the spring selling season nears, the index gauging traffic of prospective buyers rose five points to 19, its highest level since July of 2007.
Regionally, the HMI in the Northeast was up three points to 24 in the Northeast, up two-points in the South to 24 in the South, up two points to 15 in the West and unchanged at 16 in the Midwest.
"Some potential buyers who have been sitting on the sidelines are starting to at least research a new home purchase given improving affordability factors and the large selection of units on the market," said David Seiders, chief economist for NAHB "That said, builders know there's a difference between people looking and people buying, and their current outlook remains quite subdued. Additional stimulative measures on the legislative and policy side are definitely needed to bolster consumer confidence and help bring about a housing and economic recovery."
Picking up on that theme of government action, Sandy Dunn, a home builder from Point Pleasant, W.Va. who was recently elected NAHB president, said, "Congress must follow up on its recently enacted economic stimulus program by passing legislation that will jump-start the housing market and keep the economy moving forward."
Such a follow up to the recently enacted stimulus package has been proposed but not introduced in the U.S. Senate. Meantime, in an effort to prod Congress into further action, the NAHB board announced during the International Builders' Show in Orlando last week that its political action committee, the third largest contributor to Congressional election campaigns during the last cycle according to data filed with the Federal Election Commission, has ceased all contributions to the campaigns of members of Congress indefinitely.