Builder Confidence 'Close to Tipping Point'

Fallout from the fiscal cliff fiasco hurt consumer--and builder--confidence.

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Construction
Construction

Sentiment among home builders held steady in January according to data released by an industry group Wednesday, evidence that the battered construction sector is weathering a recent cold spell in the housing market.

The National Association of Home Builders/Wells Fargo Housing Market Index, which measures builder confidence in the market for newly built, single-family homes remained at a level of 47 in January, "very close" to the index's tipping point of 50, where an equal number of builders view conditions as good and poor. January's report ends eight consecutive months of gains, but the index continues to hold at its highest level since April 2006.

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"Builders and buyers took a breath in December as the political agenda remained cloudy," NAHB Chief Economist David Crowe noted in a blog post Wednesday. "While the survey took place after Congress agreed to a tax regime, the uncertainty damage had already done a job on consumers' confidence and the builders' pause is the result."

Nevertheless, an increasing number of housing markets in the lower 48 states and the District of Columbia are showing signs of improvement according to the NAHB, with 242 out of the 361 markets tracked now considered to be improving by the industry group, up from 201 in December.

Construction
Construction

"Conditions in the housing market look much better than at the beginning of 2012," Barry Rutenberg, chairman of the NAHB and a Florida-based homebuilder, said in a release.

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Still, a bevy of obstacles confront the move toward a more normal housing market, he added, including persistently tight credit conditions for buyers and builders, difficulties obtaining accurate appraisals and ongoing partisan squabbles in Washington over critical economic issues.

"Continuing discussions among policymakers related to spending cuts and the future of the mortgage interest deduction could put a damper on housing demand in the coming months," Rutenberg noted.

Meg Handley is a reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter at @mmhandley.