US home builders gain more confidence in November

16 November 2011 18:34  [Source: ICIS news]

WASHINGTON (ICIS)--US home builders have become more confident about near-term prospects for the single-family housing market, a leading contractors group said on Wednesday, with builder confidence rising to its highest level since April 2008.

The National Association of Home Builders (NAHB) said that its monthly housing market index (HMI) rose three points this month to 20.

The index saw a three-point advance in October as well.

Together, the back-to-back monthly gains for the index mark the first significant improvement in builder confidence in nearly four years (43 months).

Except for a one-month bump to 22 in May 2010 because of a short-lived federal government stimulus programme for housing, the HMI has not been at 20 since April 2008

The HMI is a compilation of three subsidiary measures: home builders’ current sales of single-family homes; the number of prospective home buyers visiting model homes; and contractors’ expectations for home sales over the next six months.

On the 1-100 HMI scale, a reading of 50 or above indicates that home builders are confident about their prospects over the next six months.

During the US housing boom years of 2002–2005, the housing market index had held steady in the mid-60s, and even reached the upper-70s at times.

Including the all-time low of 8 in January 2009, the index has been at or below 20 almost continuously for 51 consecutive months.

While the builders group welcomed the two-month gain in the index, it resisted reading too much into the upward trend.

The November advance is encouraging, said NAHB chairman Bob Nielsen, but he noted that “the overall measure remains quite low due to the many challenges that home building continues to face”.

He cited the number of home foreclosures – which recently have begun to rise again – along with continuing difficulties for builders seeking project financing, and what Nielsen termed a restrictive mortgage lending environment that is discouraging would-be home buyers.

The new home construction sector is a key downstream consuming industry for chemicals and resins, driving demand for a wide variety of chemical products and derivatives such as plastic pipe, adhesives, insulation, roofing and siding materials, paints and coatings and synthetic fibres.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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