The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

Homebuilder sentiment continued to improve in Jan, rising to 25 from 21, above expectations of 22 and it’s the best since June ’07. Present conditions rose 3 pts to 25 and the Future outlook was up 3 pts to 29. Prospective Buyers Traffic also gained 3 pts to 21. The NAHB chief economist said “builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets, and this has helped to move the confidence gauge up from near historic lows…That said, caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market.” Bottom line, the first part of the NAHB comments is why the number is now at 25 up from 16 one year ago and from 8, the historic low 3 yrs ago but the latter part of his comments is why at 25, the index is still half the breakeven level of expansion and contraction in home building.