Homebuilders are feeling slightly more confident about the outlook for the market for single-family homes, although most remain pessimistic about prospects for the next six months.

The National Association of Home Builders (NAHB) index of builder confidence rose two points in July, to a reading of 15 on a scale where 50 represents a neutral outlook. The slight increase reverses most of a 3-point decline that occurred in June on the heels of rising gas prices and negative economic reports and a weak spring homeselling season.   “The improvement in builder confidence in July is a positive sign that the outlook perhaps isn’t quite as bleak as was feared in June,” said Bob Nielsen, NAHB chair. “While builders continue to confront serious challenges…select markets are showing gradual improvement as consumers begin to take advantage of very favorable buying conditions.”   The rise in July marks the return of the index to the same narrow, three-point range it has remained in for nine of the past 10 months, suggesting that builder attitudes have remained largely the same except for a surge of pessimism last month.   Builders were considerably more upbeat over long-term prospects than they were about the current market. The index measuring sales expectations over the next six months rose six points in July, to a reading of 22, same as in April. The reading of current sale conditions rose two points to 15, while the reading of prospective buyer traffic was unchanged at 12.   On a regional basis, builders were slightly more optimistic about the market for home construction in the South and West, both of which showed 3-point gains to a reading of 17. They were most pessimistic in the Midwest, with a reading of 12, although that was up a single point from June. The regional index for the Northwest was the only one to fall, dropping two points from June to a reading of 15.

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