An index measuring homebuilder conference rose for the first time in five months during October, but showed the vast majority of builders view the current level of sales as poor.
Although more builders are expecting sales to pick up in the next six months, they remain in the minority, and traffic from prospective buyers remains low.
The National Association of Home Builders/Wells Fargo Housing Market Index asks builders builders to rate current single-family home sales, sales expectations for the next six months, and traffic from prospective buyers.
Scores from each component are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
The index gauging current sales conditions rose three points in October, to 16. The index gauging sales expectations in the next six months rose five points, to 23. The index gauging traffic of prospective buyers rose two points, to 11.
Collectively, the index was up three points, to 16 — a level last seen in June, shortly after the expiration of the federal homebuyer tax credit.
"The new-homes market is finally moving past the lull that occurred when the homebuyer tax credits expired and economic growth stalled this summer," said NAHB Chief Economist David Crowe in a press release.
Challenges to homebuilders include competition from foreclosures, inaccurate appraisal values, and "general consumer uncertainty about the economy and job market," Crowe said.
The toughest obstacles are credit-related, Crowe said: the scarcity of construction credit for builders and tighter mortgage requirements for consumers.