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October 23, 2011

Homebuilder Sentiment On the Rise
According to a report from the National Association of Home Builders, US home builders grew slightly more optimistic about the housing market in October, despite suffering through a summer of painfully sluggish sales. The group's index of builder sentiment, issued Tuesday, increased four points to 18, the biggest monthly increase in the index since April 2010, when the market was still being propped up by a tax credit for first time homebuyers.

"Builder confidence regained some ground in October due to modest improvements in buyer interest in select markets where economic recovery is starting to take hold and where foreclosure activity has remained comparatively subdued," NAHB Chairman Bob Nielsen said in a statement. Despite the sizable increase in builders' outlooks, however, the index still remains well below the fifty mark, below which indicates more builders have a negative outlook on the market than negative.

Nielsen indicated that builders are still faced with tough conditions as tough lending standards make it difficult for prospective buyers to secure financing and a large supply of foreclosures is likely to continue to pressure prices. The segment of the home builder index that saw the biggest jump was the gauge of expectations of future sales, which jumped seven points. The measures for buyer activity and current sales also increased, but not as dramatically.

Among the nation's four regions, the biggest jump in confidence came from builders in the West, who posted their most optimistic outlook since the housing crash. Builder sentiment in the Northeast, meanwhile, was unchanged. While this month's index saw numerous builders change their views from "poor" to "fair," few have gone so far as to express a view of "good." Among the builders who participated in the index, many still cite competition from foreclosures, low home values and higher costs for materials as significant hurdles to the housing recovery.

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