By Timothy R. Homan Feb. 16 (Bloomberg) — Confidence among U.S. homebuilders rose in February to a three-month high, a sign that the housing market is stabilizing amid government support. The National Association of Home Builders/Wells Fargo index of builder confidence increased to 17, higher than anticipated, from 15 the prior month, the Washington-based group said today. Readings below 50 mean most respondents view conditions as poor. The extension and expansion of a homebuyer tax credit may give a lift to demand through the first half of the year. At the same time, builders will have to contend with mounting foreclosures and an unemployment rate that’s projected to end the year at 9.5 percent. “The housing recovery remains quite tenuous and that could be the case until employment growth resumes,” said Sal Guatieri , a senior economist at BMO Capital Markets in Toronto, who accurately forecast the February figure. The report shows builders are “feeling less gloomy about the outlook,” he said. The builder confidence index was forecast to rise to 16 this month, according to the median forecast of 46 economists surveyed by Bloomberg News. Projections ranged from 14 to 17. The index, first published in January 1985, averaged 15 last year. Stocks rose after Barclays Plc’s earnings topped estimates and a separate report showed manufacturing in the New York region expanded in February at the fastest pace in four months. The Standard & Poor’s 500 Index increased 1.4 percent to 1,090.03 at 1:22 p.m. in New York. New York Manufacturing The Federal Reserve Bank of New York’s general economic index rose to 24.9 this month from 15.9 in January. Readings above zero in the so-called Empire State Index signal growth in the area covering New York and parts of New Jersey and Connecticut. The builders group’s index of current single-family home sales rose to 17 in February from 15 a month earlier. The gauge of buyer traffic held at 12. A measure of sales expectations for the next six months rose to 27 in February from 26. “Continued low interest rates, very attractive home prices that appear to have stabilized in many markets, and the availability of the home buyer tax credit make this an opportune time for potential purchasers,” Bob Jones, the group’s chairman and a builder from Bloomfield Hills, Michigan, said in a statement. “Builders are slightly more optimistic that the housing recovery is finally beginning to take root.” Gains in South Two of four regions showed a gain in sentiment. Builder confidence in the South rose to a five-month high of 19 in February from 17. Sentiment in the Midwest increased to 13 from 11. Confidence fell in the Northeast to 19 from 20, and it dropped to 14 from 15 in the West. 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 are just beginning to see the anticipated effects of the home buyer tax credit on consumer demand,” David Crowe , the NAHB’s chief economist, said in a statement. “That said, several limiting factors are still weighing down builder expectations, including the large number of foreclosed homes on the market.” Rising Foreclosures Rising foreclosures are adding to inventory and may discourage builders from breaking ground. A record 3 million U.S. homes will be repossessed by lenders this year as unemployment and depressed home values mean borrowers are unable to make their house payment or sell their property, according to a RealtyTrac Inc. forecast last month. Last year there were 2.82 million foreclosures, the most since RealtyTrac began compiling data in 2005. Foreclosure filings rose 15 percent in January from a year earlier and exceeded 300,000 for an 11th consecutive month, RealtyTrac said last week. President Barack Obama on Nov. 6 extended an $8,000 first- time buyer credit that was due to expire at the end of the month and expanded it to include current homeowners. The extension covers closings through June as long as contracts are signed by the end of April. Sales of new houses dropped 7.6 percent in December, the month after the government’s tax credit was due to expire, according to Commerce Department figures released Jan. 27. Housing Starts Housing starts , which jumped 24 percent from April to July as builders rushed to satisfy buyers taking advantage of the credit, are projected to climb 4.1 percent in January, according to the median estimate of economists surveyed. A report from the Commerce Department tomorrow may show builders broke ground on 580,000 houses at an annual pace in January, up from 557,000 a month earlier, the survey showed. December starts were 75 percent below their peak of 2.27 million at an annual pace reached in January 2006. D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, this month reported its first quarterly profit since 2007. “We expect our September quarter will be the most challenging as a tax credit support for home sales will have expired,” Donald J. Tomnitz, president and chief executive officer, said during a Feb. 2 earnings call. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net
