Home Builder Optimism Rises as Demand for National, Florida Home Loans Returns

Perhaps the incentives offered by home builders around the state have been paying off.

The builders’ trade group’s survey of their outlook, released Tuesday, ticked up slightly in October for the first time in a year. However, their view of the Florida mortgage market is still decidedly negative.

The National Association of Home Builders/Wells Fargo Index came in with a reading of 31, up from 30 in September.

The last time the index showed a month-to-month increase was October 2005, when it rose to 68 from 65.

Nevertheless, any reading below 50 indicates a majority of those builders surveyed have a negative view about the housing market. Therefore, the new reading does not signal that builders see a strong future, just a scarcely improved one.

In fact, four times as many builders viewed the current market for single-family homes as “poor” (48 percent) as the 12 percent who view it as “good.” By comparison, a year earlier the survey found 56 percent rating the market at that time as “good” and only 13 precent rating it as “poor.”

Tuesday’s survey found the builders‘ near-term outlook isn’t great, either, as only 15 percent had good expectations about the market, compared to the 37 percent who had poor expectations.

Moreover, the builders continue to report weak interest from potential buyers/Florida mortgage loan applicatns to the survey, with only 2.9 percent reporting “high” customer traffic, unchanged from September. The survey also showed 59.5 percent reporting “low” traffic, up slightly from September’s reading and the biggest share reporting low trafffic since January 1995.

Reason for optimism

David Seiders, chief economist for the National Association of Home Builders, said he’s hopeful the home building market has at least bottomed out and can start to improve from here.

“We’re not out of the woods yet, but maybe the worst is over,” said Seiders. “The mortgage interest rate story is positive coming off the highs of early July, and the energy price decline seems to be an important factor. Builders were telling us when people were paying record gas prices, it was putting a damper on building because they didn’t know if they could pay for longer commutes or to heat a home.”

The builders’ confidence survey comes the day before the Census Bureau is due to report on housing starts and building permits. Economists surveyed by Briefing.com forecast that starts slipped to an annual rate of 1.65 million in September, from 1.67 million, while new permits slowed to a 1.72 million pace from 1.73 million.

“I hope we don’t see any jump in housing starts or permits,” said Seiders. “We still have an inventory to work through.”

Until buyers come out and take these listings off the market, that inventory will continue to grow. It does mean, at least, that Florida home loan applicants are in the driver’s seat when it comes to negotiations.