Homebuilders are bullish this month, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Builder confidence in the market for newly built, single-family homes rose 12% to 46 for November, solidifying a seven-month increase streak and boosting the index to its highest reading since May 2006. 

Source: Author, data from NAHB/Wells Fargo Housing Market Index


"Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country," said NAHB Chairman Barry Rutenberg. "In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today's favorable prices and interest rates."

Current and expected sales conditions pushed the index upward, while prospective buyer traffic remained unchanged. 

While this month's results (accompanied by a rise in existing home sales ) are positive signs, the homebuilders' index has yet to cross above 50, which would mean optimism outweighs pessimism. However, Chief Economist David Crowe is quick to point out that great strides have been made since last November's reading of 19.

"At this point, difficult appraisals and tight lending conditions for builders and buyers remain limiting factors for the burgeoning housing recovery, along with shortages of buildable lots that have begun popping up in certain markets," said Crowe in a press release.

The article Homebuilder Confidence Rises for November originally appeared on Fool.com.

You can follow Justin Loiseau on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Understanding Stock Market Indexes

What does it mean when people say "the market is up 2%"?

View Course »

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

Add a Comment

*0 / 3000 Character Maximum