Housing

Homebuilder confidence makes biggest one-month gain since April 2010

by Vicki Needham - 10/18/11 2:46 PM ET

The index has been below 20 for all but one month during the past two years.

Any reading lower than 50 indicates negative sentiment about the housing market. The last time it hit 50 was in April 2006, at the market’s peak.

Builders are struggling to gain footing in a market bogged down by lower-priced foreclosures, while building materials’ costs are rising, Crowe said.

Sales of new homes hit a record low last year and aren’t shaping up for a much better result this time around.

“Confidence remains quite low as builders continue to confront overly restrictive lending policies that are discouraging prospective buyers, problems with new-home appraisals and widespread uncertainty regarding federal support for homeownership,” said NAHB Chairman Bob Nielsen, a homebuilder from Reno, Nev.

The other two component indexes also recorded gains in October.

The component gauging sales expectations in the next six months rose seven points to 24, and the component gauging traffic of prospective buyers rose three points to 14.

Regionally, the West led all other areas of the country with its nine-point gain to 21, the highest score for that region since August of 2007.

The Midwest and South each recorded four-point increases, to 15 and 19, respectively, while the Northeast held unchanged at 15.

Although new home sales constitute only about 20 percent of the market, they make a much larger economic contribution — leading to an average of three new jobs and about $90,000 in taxes per year, according to the NAHB.