US homebuilders feel ‘more positive’

 

(Bloomberg) – Confidence among U.S. homebuilders climbed more than anticipated in February to the highest level since May 2007, pointing to an improving outlook for construction.

The National Association of Home Builders/Wells Fargo index of builder confidence rose for a fifth straight month, to 29 in February from 25 in January, figures from the Washington-based group showed Wednesday. The median forecast of economists surveyed by Bloomberg News called for a rise to 26. Readings below 50 mean more respondents said conditions were poor.

D.R. Horton Inc. is among builders reporting a pickup in demand as borrowing costs hover near a record low and hiring accelerates. Efforts by the Obama administration and the Federal Reserve to shore up the real estate market and help distressed homeowners may limit the supply of foreclosed houses, lifting prospects for the industry.

“The housing market is moving toward more sustainable growth,” Barry Rutenberg, chairman of the National Association of Home Builders and a builder from Gainesville, Fla., said in a statement. At the same time, the housing sector remains fragile, he said.

The last time the builder confidence index increased five straight months or more was April through October 1995. February estimates of 51 economists in the Bloomberg survey ranged from 23 to 28.

The gauge, which was first published in January 1985, averaged 54 in the five years leading to the recession in December 2007. It reached a record low of 8 in January 2009.

The builders group’s index of current single-family home sales rose to 30 this month, the highest since May 2007, from 25 in the prior month, Wednesday’s report showed.

A measure of sales expectations for the next six months advanced to 34, the best reading since July 2007, from 29. The gauge of buyer traffic rose to 22, the highest since June 2007, from 21.

The confidence survey asks builders to characterize current sales as “good,” “fair” or “poor” and to gauge prospective buyers’ traffic. It also asks participants to gauge the outlook for the next six months.

Builders in the West led the increase, with the index jumping to 44, the highest since July 2006, from 21. Confidence rose to 30 in the Midwest, the highest since April 2006. Sentiment decreased in the Northeast and South.

D.R. Horton, the largest U.S. homebuilder by volume, reported net home orders rose to 3,794 in final three months of 2011, from 3,363 a year earlier.

“Simply put, our business feels more positive,” Donald Tomnitz, CEO of the Fort Worth, Texas-based company, said in a Jan. 27 conference call. At the same time, “macroeconomic and housing conditions remain soft,” and “we are cautiously optimistic for the remainder for 2012,” he said.

Bank of America Corp., J.P. Morgan Chase & Co. and three other U.S. banks reached a $25 billion settlement with 49 states and the U.S. government to end a probe of abusive foreclosure practices prompted by the collapse of the housing price bubble. President Barack Obama said the agreement, announced on Feb. 9, is a “major step” in reviving the housing market.

Housing starts also are improving. Builders broke ground on new homes at a 675,000 annual pace in January, up from a 657,000 rate the previous month, according to the Bloomberg survey median ahead of a Commerce Department report due Thursday.

Work on apartment projects has climbed as the foreclosure crisis turned more Americans into renters, helping to reenergize the industry that’s struggled since triggering the last recession.

Construction of multifamily units will lead homebuilding again this year, allowing housing to contribute to growth for the first time in seven years, according to forecasts from economists Michelle Meyer of Bank of America and Celia Chen of Moody’s Analytics Inc.

By Bloomberg News

 

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