US home builder confidence inches up in Feb

19 February 2008 21:23  [Source: ICIS news]

WASHINGTON (ICIS news)--Hopes for a recovery in the crucial US residential construction sector rose marginally in February as more potential home buyers appeared to enter the market, a housing industry trade group said on Tuesday.

 

The National Association of Home Builders (NAHB) said its survey of residential contractors this month showed that “builder confidence in the market for new single-family homes edged marginally higher in February”.

 

The association said that its housing market index (HMI) rose to 20 for February, a one-point increase from January’s measure and two points above the index’s all-time low of 18 reached in December last year.

 

The US home construction sector, which has been in a steady and sharp decline since the end of 2005, is a major downstream consuming market for chemicals and chemical-based products such as insulation, roofing and siding materials, adhesives, paints and coatings and plastic pipe, among others.

 

However, home builders were cautious about the significance of February’s index gain, which was attributed chiefly to an increase in the number of prospective new home buyers visiting model homes across the country.

 

“While builders remain very cautious about the outlook for new home sales given today’s economic environment, the fact that more consumers appear to be checking out their options is a good sign,” said Sandy Dunn, association president and a home builder in West Virginia.

 

“Some potential buyers who have been sitting on the sidelines are starting to at least research a new home purchase, given improving affordability factors and the large selection of units on the market,” said association chief economist David Seiders.

 

“That said, builders know there’s a difference between people looking and people buying, and their current outlook remains quite subdued,” Seiders said.

 

Increased interest among potential home buyers comes in the wake of a series of key interest rate reductions by the US Federal Reserve Board and economic stimulus measures by the White House and Congress, aimed chiefly at reviving the housing market.

 

The housing market index, which NAHB compiles in association with Wells Fargo Bank, was in the 65-72 range during the home building boom years of 2003-2005 before beginning its sharp decline at the end of 2005. 

 

The index fell to the 40s and 30s in 2006 and through the 20s last year before hitting an apparent bottom at 18 in December.

By: Joe Kamalick
+1 713 525 2653

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