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Homebuilders on Housing Market: More of the Same

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The housing market has been improving for more than half a year at this point and many in the real estate industry are optimistic about its future. As such, builder confidence remained somewhat stagnant in January.

Builder confidence had been growing for eight consecutive months, but plateaued in January thanks in large part to factors outside the housing market, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. The level held steady at a rating of 47 from December. When the index reaches a rating of 50, that means there are an equal number of builders who feel market conditions are good versus those who feel they’re poor.

One factor that may be discouraging but is largely related to the housing market is that many lenders are remaining somewhat tight with credit, making it more difficult for some borrowers to qualify for mortgages, the report said. On the other hand, ongoing fiscal uncertainty in Washington that could upset the national or even global economy still weighs heavily on builders’ minds as well.

“Conditions in the housing market look much better now than at the beginning of 2012 and an increasing number of housing markets are showing signs of recovery, which should bode well for future home sales later this year,” said Barry Rutenberg, chairman of the National Association of Home Builders. “However, uncertainties stemming from last month’s fiscal cliff negotiations contributed to the pause in builder confidence and continuing discussions among policymakers related to spending cuts and the future of the mortgage interest deduction could put a damper on housing demand in the coming months.”

On the other hand, more builders felt current sales conditions were good, but the rating held steady at December’s 51, the report said. Sales expectations slipped one point to a rating of 49, while traffic of prospective buyers crept up by the same margin to 37. The West and Midwest regions were where builders were most positive, with ratings of 51 and 50 thanks to gains of four and two points, respectively.

Experts say the housing market is expected to continue its recent trend of dramatic improvements throughout 2013 and could see similar gains to those observed last year if there is nothing done to upset the national economy in the meantime.

Image: RobotSkirts, via Flickr

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