The Builders Are Back

Builder Confidence Hits One Year High
Yesterday’s NAHB/Wells Fargo Housing Market Index press release showed another increase, as the builder confidence rose to a score of 18, the highest number in more than a year.

NAHB officials credited federal and state tax credits for buoying spirits within the industry but cautioned that a potential recovery could be jeopardized once the credits end, particularly as home building loans remain difficult to secure and haggling continues regarding appraisal rules.

Though the HMI is moving in a positive direction, it must be noted that this is relative to historically low builder confidence and the overall score remains poor. Also noteworthy about the survey is that builders are especially optimistic about the next six months. This underscores NAHB leadership thought regarding the critical nature that tax incentives are playing in the nascent recovery.

Uvestor Opportunity:
For those interested in selling moderately priced foreclosures, having the NAHB lobbying for extended tax incentives for first-time home buyers and expanded tax incentives to lower income buyers certainly helps the cause. Granted, a more confident new construction sector increases competition for eligible buyers, but most investors welcome anything that bolsters activity and buyer confidence.

Though certainly tentative, a recovery for the home builders would signal (most analysts agree) a meaningful recovery for the entire real estate market. The fact that the builders themselves are a little more hopeful is a positive sign for everyone. It remains to be seen, however, whether the bump is temporary or whether it can be maintained once through the fall and winter months.