Confident Builders Suggest Housing Market Is Stabilizing
An increase in housing starts and builder confidence means good things for the notoriously troubled market.
(Image source: New York Daily News )
BY MATTHEW PICHT
ANCHOR LAUREN GORES
Good news for the housing industry--after a five-year bust, the market may finally be on the mend. New economic data suggests, from a builder's perspective, things are looking up. Fox News explains .
“Housing starts in the US rose more than expected last month. They increased by 2.6 percent from March, to an annual rate of 717,000. The estimate was for 680,000.”
Not only are more new houses going up, but builder confidence in the market is also increasing rapidly. The National Association of Home Builders /Wells Fargo Builder Confidence Index climbed to 29 points this month, up 5 points from April to reach a five-year high.
“This continues to reinforce the notion that consumers are coming back into the marketplace. They’re taking advantage of very low mortgage rates, low house prices.”
While this new data seems to indicate a growing confidence in the market, skeptics caution against reading too much into the numbers. The increase in housing production may not mean much if the corresponding demand doesn’t grow as well.
“Doesn't this US positive data account for anything?”
“Absolutely not. Look, I’m not trying to be doom and gloom here, but you’d be a fool to buy a home right now. Homebuilders are not doing themselves a favor by building more supply; they’re adding to supply right now.”
And while builder confidence is on the rise, it’s not where it should be. The Wall Street Journal notes ...
“The index has a long way to go before it reaches pre-bust levels. A reading above 50 in the NAHB index would mean that more builders view conditions as good rather than poor. The gauge hasn’t been in positive territory since April 2006.”
The positive news about housing starts offsets a 7 percent drop in April building permits.