Home Loan Focus

Home Builder Confidence – Another Sign of the Bottom?

Home builder confidence is up for the second straight month and those in the building industry are more than willing to say that indicates the bottoming out of the ailing housing market.

“The bottom line is there are good signs on the horizon,” said Jerry Howard, president and chief executive of the National Association of Home Builders. “It’s fair to say we could be closing in on the bottom, but we have a long road ahead of us.”

NAHB Chief Economist David Crowe seemed even more upbeat.

“The fact that the May [index] continued to tick up from April’s five-point increase provides confirming evidence that the improved confidence level was no fluke. This continued increase indicates that home builders feel we’re at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves.”

The NAHB/Wells Fargo housing market index increased by two points to 16 in May. This measure of builder confidence in the market is still near record lows and any score below 50 indicates negative sentiment about the market. So there are slightly fewer builders who feel badly about the state of things now than there were last month.

What’s interesting to me is how slight differences in these types of reports make such a big difference in the mood of the broader markets. National and global stock markets rose today after the NAHB announcement.

So if all the mortgage and housing markets are so hinged on public sentiment it seems like we should all just talk a little more rosily about our home loan and financial situations, right? Or was inflated optimism and over confidence what got us into the current mortgage mess in the first place? Hmm…

Source: Home Builder Confidence – Another Sign of the Bottom?

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