Home builders are feeling a little better this month thanks to a higher-quality traffic going through their homes, according to the NAHB/Wells Fargo Housing Market Index (HMI) released Tuesday. The overall index showed a slight improvement to a reading of 16, up from 15 the previous month.
“Many builders are reporting that while the quantity of buyer traffic through their model homes has not improved dramatically, the quality of that traffic seems to be getting better – meaning that more people appear to be serious about buying in the near future,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich.
Two of the three components of the HMI improved during November. Traffic of prospective buyers rose one point to 12, current sales conditions held unchanged at 16, but sales expectations in the next six months rose two points to 25.
“This is the highest that [the sales expectations] component of the HMI has been since the home buyer tax credit program spurred sales activity this spring,” said NAHB Chief Economist David Crowe.
Regionally, the November HMI scores were mixed: Gains were reported in the Midwest and West with five points to 18 and three points to 15, respectively. The South held even at 18, while the Northeast dropped to 13.
Credit access for builders, though, has been the absolute deal-breaker that has continued to dampen any hopes of significantly stronger potential buyer activity.
“Builders remain very concerned, however, about the lack of available financing for new-home construction at a time when inventories of completed new homes are quite thin, said NAHB Chairman Jones. “You can't sell what you can't build.”
Added Crowe: “Survey participants say they have observed absolutely no improvement in their ability to access credit to build viable new projects. This problem is clearly a roadblock to recovery in many markets.”
Matthew Phair is a freelancer in New York.