Home builder confidence in new, single-family homes soared to its highest point in four years, according to the National Association of Home Builder's survey. But it's still well below what's considered positive.
The monthly index on builder sentiment rose 4 points to 29, its highest point since 2007. Fifty is the point between positive and negative. The index measures three components: buyer traffic, current sales and sales expectations for the next six months. The component measuring sales expectations rose 6 points, the highest of the three.
David Crowe, chief economist of the builder's association, says that although the rise in confidence is a good sign, there are still several factors holding back a housing recovery, including foreclosures slowing down new home sales and appraisals that come in below the cost of construction. After delays in processing paperwork caused foreclosures to stall, Realty Trac reports that they are on the rise again, increasing 3 percent in January from a month earlier. RealtyTrac's CEO says he expects foreclosures to continue to increase in the coming months.
Potential homeowners are also having trouble qualifying for a mortgage, even though rates have been at historic lows. Applications for new mortgages and refinances dropped again this week, according to the Mortgage Bankers Association.
Spring is traditionally a busy time for home sales, which could partly account for the confidence in sales expectations. Whether it gives enough of a boost to the market to make a difference remains to be seen.
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