Home Builder Confidence Hits 19-Month High

Confidence among home builders could signal demand for new construction is slowly returning.

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It's not often you see optimism and the housing market in the same sentence, especially when it comes to the building sector. But things might be looking up for the industry, according to a report from the National Association of Home Builders, or, at least not looking as bad.

Confidence among home builders is up for the third month in a row to a 19-month high, according to December's NAHB/Wells Fargo Housing Market Index. Though still very weak, more consumer demand for new single-family homes could be fueling the three-month surge, says NAHB chief economist David Crowe. The index gauges builder perceptions of current single-family home sales and sales expectations.

[Read: Survey: Dems Lose Hope in Obama's Housing Fix.]

"It tends to be a predictor," says Crowe. "Today's number is 21, so it's still a long way from 50 [a market considered to be "in balance"], but it has been increasing for three straight months, which it had not been doing."

That demonstrates some increased demand from consumers for new constructions, Crowe says, which is supported by the housing starts numbers expected to come out tomorrow. Early predictions put housing starts up a hair more than 1 percent.

[Read: Priciest Place to Live in the U.S.? Surprise: It's Not NYC.]

"Builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months," Crowe said in a release.

Still, the low confidence reading underscores builders' wariness of adding more inventory to a weak-demand market. The difficulties would-be buyers have faced getting financing for home purchases have further stunted demand. Builders, too, have reported trouble securing loans for new projects. Without better access to credit, low demand and low confidence are likely here to stay.


Twitter: @mmhandley

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