Will Homebuilder Confidence Rise in 2012?

Will Homebuilder Confidence Rise in 2012?

Though some real estate experts aren’t projecting a hugely hopeful 2012 for people looking to sell their homes and move out with a profit, the same isn’t being said about homebuilders.  Apparently, the confidence of homebuilders across the country is at the highest level since May 2010.

What is sparking this apparent newfound confidence?  There is actually an increasing interest in moving into new houses, which is allowing homebuilders to feel a little less pessimistic about the housing market.  However, the tighter lending standards set by the banks will still likely keep many potential buyers from actually buying those new homes.

The National Association of Home Builders tracks the sentiment index of homebuilders across the United States.  In December, the index rose to 21, which is the highest it’s been in a long time.  However, any index under 50 reveals some negative sentiment about the housing market by the homebuilding industry.  It hasn’t hit 50 since April 2006.  That was the peak of the housing boom, right before the bubble burst.

In 2010, the number of people moving into new homes fell to the lowest level it has ever been.  2011 will be pretty close to that.  New homebuilders are struggling to compete with short sales and foreclosures, which has driven the price of new homes down even more.  But, the tighter lending practices make it hard for buyers to qualify for loans. That means less people are moving into new homes.

There are pockets of hope across the country – New Orleans, Pittsburgh and other small areas are showing increases in the purchase of new homes.

Lance Grooms