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Builder confidence low, but holds steady

According to the National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence remained steady in August at 16.

The index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either “good,” “fair” or “poor.”

Two out of three of the indicator’s component indexes posted gains in August, including a one-point rise in the index gauging current sales conditions, to 16, and a two-point uptick in the index gauging sales expectations for the next six months, to 25. The component gauging traffic of prospective buyers remained unchanged at 12.

“With the passage of crucial housing legislation last month that created an attractive home buyer tax credit, there is a sense that home sales may soon be reaching a turning point,” predicted NAHB president Sandy Dunn, in a statement.

NAHB chief economist David Seiders pointed out that the builder confidence index still is at a record low. Still, he said it’s “a good sign that two out of three of the HMI’s component indexes rose in August, and this may be an indication that we are nearing the bottom of the long downswing in new home sales.”

Regionally, the Northeast and Midwest each posted gains in builder confidence, with the Northeast up two points to 16 and the Midwest up four points to 14. Meanwhile, the South remained unchanged at 20, and the West, whose new homes market has been heavily impacted by an upswing in foreclosure sales at cut-rate prices, posted a decline of three points to 11.