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Builder Confidence Holds Steady

A drop in mortgage rates and a boost in consumer confidence helped stabilize market expectations of single-family home builders during January. Builder confidence held steady for a second straight month, after a six-month slide.

The monthly Housing Index compiled by the National Association of Home Builders (NAHB) and Wells Fargo Bank was unchanged during January at a level of 57. “The January level, comfortably above the midpoint, indicates that the majority of builders still see conditions as positive in their markets,” said the builders' trade group.

“Housing markets across the country have cooled, as predicted, and builders are aware than some slowing in demand is inevitable following the record-breaking sales for the past three years,” said David Pressley, NAHB president.

David Seiders, chief economist of the trade group, commented, “Single-family housing affordability has been eroded by the accumulation of large house price increases in recent years, but some softening of long-term interest rates since the early-December survey helped to buoy builder attitudes. This has been bolstered by the fact that consumer confidence has rebounded nicely form post-Hurricane Katrina lows.”

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