Homebuilders More Confident in Housing Recovery as Perspective Buyer Traffic Improves

Homebuilder sentiment rose for the third straight month in December to its highest level since the spring of 2008, according to an industry association survey, which showed significant gains in the component measuring traffic of perspective buyers.

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The National Association of Home Builders/Wells Fargo Housing Market Index edged up two points to 21, according to this morning’s report.

“This is the first time that builder confidence has improved for three consecutive months since mid-2009, which signifies a legitimate though slowly emerging upward trend,” said National Association of Home Builders Chief Economist David Crowe.

“While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months,” he said.

However, difficulty in obtaining credit remains a major hurdle, as tighter mortgage underwriting standards are holding back much of the market. Furthermore, while analysts say there is significant pent-up demand for new homes, given how many Americans have moved in with family members or chosen to rent rather than buy, potential buyers are suffering from a deep lack of confidence not just in housing but in the economy in general.

Builder confidence gained the most strength in the South, and declined slightly in the Northeast. Sentiment continues to improve in the West, where much of the overbuilding of the last decade took place. However, a significant share of smaller builders in the West have gone out of business, and now big builders are stepping in to take their place.

Miami-based Lennar (NYSE:LEN) announced it acquired control of approximately 650 finished home sites in 20 communities in the Pacific Northwest from Seattle-based Premier Communities, marking the first entry into a new market by Lennar in almost two years.

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