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Builder Confidence Sees Small Setback

construction-twoHomebuilder confidence in the housing market pulled back slightly in the year's final reading, ending 2014 at the same level as a year ago.

Following a four-point uptick in November, the National Association of Home Builders' (NAHB) Housing Market Index dropped one point to 57 in December, the group said Monday. A reading above 50 indicates that market conditions are viewed more as good than bad.

"After a sluggish start to 2014, the HMI has stabilized in the mid-to-high 50s index level trend for the past six months, which is consistent with our assessment that we are in a slow march back to normal," said NAHB Chief Economist David Crowe. "As we head into 2015, the housing market should continue to recover at a steady, gradual pace."

Looking ahead, analysts predict a bounce in housing starts and new home sales, both of which were weak this year compared to other improving indicators. Despite a rebound in 2014's second half, new homebuilding is on track to finish the year at an estimated 1.05 million units, while new home sales have continually come in at an annual rate of less than half a million.

Despite these setbacks, builders in NAHB's survey remained largely optimistic. The index measuring current sales conditions registered 61 in December, while the index gauging expectations for future sales was 65—both well above the neutral line, despite each losing a point.

Meanwhile, the measure of traffic from prospective homebuyers held steady at 45.

"Members in many markets across the country have seen their businesses improve over the course of the year, and we expect builders to remain confident in 2015," said NAHB Chairman Kevin Kelly.

Regional indicators were mixed in December, with the Northeast, Midwest, and South all posting declines from month to month. The West, on the other hand, saw a big gain of 14 points, putting its index at 74.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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