Builders Blame Congress For Home-Buying Headwinds

Builder confidence in the market for newly constructed homes remains only moderately positive according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today.  The HPI registered at 54 in November, unchanged from a downwardly revised October reading.   It was the sixth consecutive month that more builders have viewed market conditions as good than poor but over that time the HPI has not moved significantly above the positive/negative dividing line.

The index is derived from a survey conducted by NAHB among its single-family residential builders.  They are asked to gauge current home sales and their expectations for sales over the next 12 months as "good," "fair," or "poor" and the rate the current traffic of prospective buyers from low to very high.  Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The index component measuring current sales conditions was also unchanged, remaining at 58, while the component measuring builders' six month expectations fell from 61 to 60.  The component gauging current buyer traffic dropped one point to 41.

"Given the current interest rate and pricing environment, consumers continue to show interest in purchasing new homes, but are holding back because Congress keeps pushing critical decisions on budget, tax and government spending issues down the road," said NAHB Chairman Rick Judson. "Meanwhile, builders continue to face challenges related to rising construction costs and low appraisals."

"Policy and economic uncertainty is undermining consumer confidence," said NAHB Chief Economist David Crowe. "The fact that builder confidence remains above 50 is an encouraging sign, considering the unresolved debt and federal budget issues cause builders and consumers to remain on the sideline."

The HMI three-month moving average was mixed in the four regions. No movement was recorded in the South or West, which held unchanged at 56 and 60, respectively. The Northeast recorded a one-point gain to 39 and the Midwest fell three points to 60.