Economists surveyed by Bloomberg had expected the NAHB/Wells Fargo Housing Market Index to rise to 17 in November. The index was at 13 in September and August, and 14 in July. A year ago, it was at 17. It hit an all-time low of 8 in January 2009 and an all-time high of 72 in June 2005. Index readings above 50 indicate that more builders view sales conditions as good than poor.
However, there were a pair of unqualified bright spots in the November NAHB report: Two of the three components rose. The component gauging six-month sales expectations rose two points to 25, and the traffic of prospective buyers component moved up one point to 12. The component gauging current sales conditions was unchanged at 16.
Future Is Looking Better
Regionally, builder confidence also rose in two of four parts of the country: The index gained 5 points to 18 in the Midwest, and rose 3 points to 15 in the West. It was unchanged at 18 in the South, and fell 3 points to 13 in the Northeast.
David Crowe, NAHB chief economist, said that although the homebuilder index did not rise as much as expected in November, he's focusing on the longer term.
"The most positive aspect of today's report is the future expectations component, which not only held onto the five-point gain it registered in October, but improved by an additional two points to 25 for November," Crowe said in a statement. "This is the highest that component of the HMI has been since the homebuyer tax credit program spurred sales activity this spring."
No Improvement in Accessing Credit
Still, Crowe underscored that the construction financing issue remains a serious one for the housing sector.
"The most concerning aspect of the report is that survey participants say they have observed absolutely no improvement in their ability to access credit to build viable new projects," Crowe said. "This problem is clearly a roadblock to recovery in many markets."
On the one hand, the bulls can point to a slight improvement in the sales expectations components and a five-month survey period that suggests that homebuilder confidence may have bottomed out around July.
One the other hand, the bears can counter with the fact that although builder sentiment may have bottomed this summer, builders certainly aren't bursting with joy regarding sector conditions so far this fall. What's more, the confidence index remains low -- nowhere near the 50-plus readings that would indicate a healthy housing market.