Tuesday, December 20, 2011


Optimism has been in short supply for quite a while now in the battered home building industry. But a report Monday from the National Association of Home Builders brings evidence of a positive trend — or maybe just a less-than-gloomy one.

The builders’ trade group said its housing market index rose for the third-straight month, increasing to a reading of 21 from a downwardly revised 19 in November. The index reached its highest point since May 2010.

It was the first time since mid-2009 that the index increased for three months in a row. The results were better than expected, as economists polled by Dow Jones Newswires had forecast a reading of 20.
All three components of the builders’ index increased, including a three-point jump in traffic from potential buyers. Sales expectations over the next six months and builders’ assessment of current sales conditions also grew.
Despite the recent trend of increases, confidence is low from a historical perspective. A reading above 50 in the NAHB index would mean more builders view conditions as good rather than poor, and the last time the gauge was in positive territory was April 2006.

The December index was based on a survey of 477 builders. It rose in two of four U.S. regions, the South and the West.

Many analysts noted that this year’s sales and traffic from potential homebuyers may simply appear better in comparison to last year. That’s because the second half of 2010 was exceptionally weak for the industry, after the expiration of a federal tax credit that had boosted sales earlier in the year.

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