Homebuilder confidence up, remodeling on the rise

The National Association of Homebuilders/Wells Fargo Housing Market Index for October found builder confidence in the market for newly built, single family homes rose four points to 18, the largest one-month gain in the index since April of 2010.

The index's three component indexes experienced substantial gains in October. Current sales conditions rose four points to 18, sales expectations in the next six months increased seven points to 24 and traffic of prospective buyers grew three points to 14.

David Crowe, chief economist for NAHB, said the rise in confidence is a good indication of housing recovery in certain parts of the country.

"However, it's worth noting that while some builders have shifted their assessment of market conditions from 'poor' to 'fair,' relatively few have shifted their assessments from 'fair' to 'good,'" said Crowe. "One reason is that builders are facing downward pricing pressures from foreclosed homes at the same time that building materials costs are rising, and this is further squeezing already tight margins."

In addition, the BuildFax Remodeling Index reported remodeling activity reach a record high during August, estimating more than 3.3 million residential remodeling projects will receive permits in 2011. The index showed August was the month with the highest remodeling activity since the inception of the index in 2004, and is the 22nd consecutive month of activity growth.

“As mortgage rates hit record lows, it is apparent that millions of Americans are refinancing their homes and using some of their new monthly savings to reinvest in their homes with remodeling projects,” said Joe Emison, vice president of research and development at BuildFax. “With remodeling activity growing at an estimated 9.5 percent in 2011 compared to 2010, this is one segment of the economy that is showing continued strength, even as other sectors struggle.”

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