March 19 (Bloomberg) -- Confidence among U.S. homebuilders held in March at the highest level since June 2007 as sales expectations climbed for a sixth month.
The reading of 28 in the National Association of Home Builders/Wells Fargo index of builder confidence was less than projected and followed a February figure that was lower than initially reported, figures from the Washington-based group showed today. The median forecast of economists surveyed by Bloomberg News called for a rise to 30. Readings below 50 mean more respondents said conditions were poor.
Cheaper homes and mortgage rates close to all-time lows are helping drive record housing affordability, benefiting builders such as Toll Brothers Inc. At the same time, the real estate market remains challenged by distressed properties and the threat of more foreclosures that could push down values further.
“While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving,” Barry Rutenberg, chairman of the National Association of Home Builders and a builder from Gainesville, Florida, said today in a statement.
March estimates of 49 economists in the Bloomberg survey ranged from 28 to 33. The gauge, which was first published in January 1985, averaged 54 in the five years leading to the recession in December 2007. It reached a record low of 8 in January 2009.
Confidence improved among builders in three of the four U.S. regions, while is slumped in the West after a February surge.
The builders group’s measure of the six-month outlook for home sales climbed to 36 in March, also the highest since June 2007, from 34. The index of current single-family home sales eased to 29 this month from 30 in the prior month, today’s report showed. A measure of traffic of prospective buyers held at 22.
The confidence survey asks builders to characterize current sales as “good,” “fair” or “poor” and to gauge prospective buyers’ traffic. It also asks participants to gauge the outlook for the next six months.
“All the economic signs seem to be positive in terms of consumer confidence, interest rates, unemployment levels,” Martin Connor, chief financial officer at Toll Brothers Inc., said March 5 at a investors’ conference in Orlando, Florida.
The average rate on a 30-year fixed mortgage reached an all-time low of 3.87 percent in February, according to data from Freddie Mac.
A measure of housing affordability a month earlier climbed to 206.1, according to the National Association of Realtors. A value of 100 means that a family with the national median income has enough to qualify for a median-priced property.
Housing starts also are improving. Builders broke ground on new homes at a 700,000 annual pace in February, the most in three months, according to the Bloomberg survey median ahead of a Commerce Department report due tomorrow.