Builders bullish on housing

Home builders continue to be bullish about housing.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, released Tuesday, posted its fifth consecutive rise in builder confidence for newly built single-family houses. The latest gain pushed the September index to its highest level in more than six years, according to the Washington, D.C.-based trade group.

Builders are expressing a more positive outlook about current sales, future prospects and foot traffic through their sales offices and model homes, said David Crowe, NAHB chief economist, in a statement.

Barry Rutenberg, NAHB chairman and a home builder in Gainesville, Fla., said in the NAHB statement that the builders’ renewed confidence was further assurance of a housing recovery.

Still, both Crowe and Rutenberg were quick to note several concerns which could reverse this positive trend.

Builder concerns

Builders are concerned about a shortage of buildable lots in some markets and rising costs of certain building materials, Crowe said.

In his blog, he explained that builders are paying higher prices for wood panels, dimension lumber, drywall and other materials because suppliers are holding back on opening new facilities until they’re certain more homes will be built.

“Given the fragile nature of the housing and economic recovery, these are significant red flags,” Crowe said.

Rutenberg noted another obstacle—financing. Rutenberg thinks tight credit conditions are slowing the sector’s progress.

“Tight credit conditions are preventing many builders from putting crews back to work, which would create needed jobs, and discouraging consumers from pursuing a new-home purchase,” Rutenberg said.

Improving housing markets

Separately, the NAHB/First American Improving Markets Index, released on September 10, showed a significant rise in the number of improving housing markets across the country. This index is based on home-building permits, employment and house price appreciation.

“The number of improving housing markets grew by 19 in September as 68 metros retained their spots, 31 new metros were added and just 12 dropped off the list,” Rutenberg said in an NAHB statement. “This solid growth is an encouraging sign that housing continues on a slow but steady recovery path that is gradually advancing from one local market to the next.”

The newly improved markets included Tucson, Ariz., Jacksonville, Fla., Springfield, Ill., Greenville, N.C., and Bend, Ore.