US builder confidence rises for sixth month in October

16 October 2012 16:25  [Source: ICIS news]

HOUSTON (ICIS)--US builder confidence for new, single-family homes rose for the sixth consecutive month in October, though there are constraints on the speed of housing recovery, the National Association of Home Builders (NAHB) said on Tuesday.

The NAHB/Wells Fargo Houston Market Index (HMI) gained one point, bringing the index to 41, the highest level since June 2006.

Builders are seeing more serious buyers, and overall confidence is higher than it was this time last year, NAHB chairman Barry Rutenberg said.

Despite the growing demand for new homes, he said, overly tight credit conditions put constraints on new building and purchases when “that kind of economic activity and the job growth it generates are greatly needed", Rutenberg said.

Difficult appraisals and limited inventory of buildable lots in certain markets are also constraints that moderate the speed of housing recovery, NAHB chief economist David Crowe said.

“These are the complicating factors that make it difficult for builder confidence to reach and surpass the 50-point mark, at which an equal number of builders view sales conditions as good versus poor," Crowe said.

The NAHB’s monthly survey rates builder perception of single-family home sales and expectations, as well as traffic of prospective buyers.

The HMI components for October were 42 for current sales conditions and 51 for sales prospects for the next six months, the report said. Traffic of prospective buyers increased 5 points to 35, the highest since April 2006.

On the regional level, builder confidence on three-month moving averages rose two points in the midwest and west to 42 and 44, respectively. The three-month moving average rose three points to 39 in the south and remained unchanged at 29 in the northeast.

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals, resins and derivative products such as plastic pipe, insulation, paints and coatings, adhesives, roofing materials and synthetic fibres.

The American Chemistry Council (ACC) estimates that each new home built represents some $15,000 (€11,550) in chemicals and derivatives used in the structure or in production of component materials.

($1 = €0.77)

By: Tracy Dang
+1 713 525 2653

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