Builder confidence rebounded in July to a level not seen since September, but far more builders still see conditions as "poor" than "good," according to a survey by an industry trade group.

The National Association of Home Builders/Wells Fargo Housing Market Index rose two points in July, to 17, NAHB said. The index gauges builder perceptions of current single-family home sales and sales expectations for the next six months. When the seasonally adjusted index is above 50, more builders view sales conditions as good than poor.

The index is composed of three components, and most of July’s gain was in the component gauging current sales conditions, NAHB Chief Economist David Crowe said in a press release.

The component of the index gauging traffic of prospective buyers rose a single point to 14, and the component gauging sales expectations for the next six months remained flat at 26.

Regionally, the South posted the biggest gain, with a 5-point increase in the index to 20. The Northeast posted a three-point decline, to 16, while the Midwest and West were each unchanged, at 14 and 15, respectively.

"Builders recognize the recovery is going to be a slow one and that we are facing a number of substantial negative forces," Crowe said. One in four new-home sales are falling through due to appraisal issues that are tied to the use of distressed and foreclosed properties as "comps," he said.

NAHB and the National Association of Realtors have both complained that new rules governing appraisals conducted for loans slated for purchase by Fannie Mae and Freddie Mac have had unintended consequences since they went into effect May 1, including an increased reliance on appraisal management companies and the use of distressed properties as comparable sales (see story).


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