AP Real Estate Writer
Los Angeles (AP) â€” An increase in the number of prospective homebuyers walking through model homes raised homebuilders’ confidence level this month, but the industry remains pessimistic that new home sales will improve over the next six months, according to a survey released Tuesday.
The National Association of Home Builders/Wells Fargo housing market index rose one point to nine in February, after dropping to an all-time low of eight in January.
The report reflects a survey of 421 residential developers nationwide, tracking builders’ perceptions of market conditions. Index readings lower than 50 indicate negative sentiment about the market. The index has been below 10 since November, reflecting tougher market conditions and a worsening U.S. economy.
But some builders reported an uptick in traffic in recent weeks. Lower mortgage rates and aggressive incentives have made homes more affordable. Buyers also will get a financial boost from the mammoth economic stimulus package signed Tuesday.
First-time homebuyers will get an $8,000 tax credit. At the same time, Congress extended higher Fannie Mae and Freddie Mac loan limits in high-cost metro areas through the end of the year.
Builders surveyed said current markets conditions improved slightly from January, while the index for foot traffic by prospective buyers jumped three points to 11.
Still, builders’ outlook for sales over the next six months slipped two points to 15, an all-time low.
David Crowe, chief economist for the Washington-based trade association, said homebuilders remain particularly concerned about the glut of unsold homes on the market, which is driving down prices.
“This is one reason that homebuilder expectations for the next six months declined in the February (index) even though traffic of prospective buyers has improved somewhat and present sales conditions were basically unchanged,” according to a information attributed to Crowe in a statement.
Regionally, builder confidence rose by one point in the South to 12 and in the West to 5. The index rose two points to eight in the Midwest, but declined by one point to nine in the Northeast.