By Courtney Schlisserman
April 15 (Bloomberg) -- Homebuilders in the U.S. turned less pessimistic in April as customers took advantage of a government tax credit before it expires.
The National Association of Home Builders/Wells Fargo index of builder confidence increased to 19, exceeding the median forecast of economists surveyed by Bloomberg News, from 15 the prior month, data from the Washington-based group showed today. Readings less than 50 mean more respondents said conditions were poor.
Buyers rushed to qualify for an Obama administration cash incentive by signing deals ahead of an April 30 deadline, sending the builders’ gauge of current home sales to the highest level in two years. Even so, unemployment at 9.7 percent, close to a 26-year high, indicates construction will take years to regain the heights reached ahead of the worst recession since the 1930s.
“We’re still at a very low level of construction, one where builders are still quite cautious,” Michelle Meyer, a U.S. economist at Barclays Capital Inc. in New York, said before the report. “It will take a considerable improvement in sales this spring to warrant a stronger turn higher.”
The index this month was forecast to rise to 16, according to the median projection of 47 economists surveyed. Estimates ranged from 14 to 18. The gauge, which was first published in January 1985, averaged 15 last year.
Other reports today showed manufacturing accelerated, while the labor market stagnated.
Manufacturing Rebound
Factory production rose 0.9 percent in March after a 0.2 percent gain a month earlier, the Federal Reserve said. The New York Fed’s Empire State index for April rose to 31.9, a ninth straight month of growth, and the Philadelphia Fed’s general economic index rose to 20.2. Readings greater than zero denote expansion.
Meanwhile, initial jobless claims unexpectedly increased last week, rising by 24,000 to 484,000, the highest in two months.
The builders group’s index of current single-family home sales rose to 20 in April from 15 a month earlier. The last time the measure was that high was in March 2008.
The gauge of buyer traffic rose to 14, the highest since September, from 10 in March. A measure of sales expectations for the next six months increased to 25 from 24.
Aware of Headwinds
“An expected surge in buyer activity leading up to the expiration of the home buyer tax credits and a gradually improving economy helped to brighten builders’ view of the marketplace in April,” NAHB Chief Economist David Crowe said in a statement. “Meanwhile, builders have a more neutral view of what may come in the next six months, and are very aware of the many factors that continue to drag on housing at this time.”
Under the government program, which was renewed and expanded in November, buyers have to sign contracts by the end of April and close on homes by June 30 to qualify for a credit worth as much as $8,000.
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.
Builders in the Midwest led the improvement, with the index in the region climbing to 15 from 10. The South increased to 21 from 17. The measure was unchanged in the Northeast and dropped in the West.
