Builders' confidence remains shaky in tough market

Home-builder confidence improved in July, although the market is still weighted down by foreclosures and lower prices for distressed homes. 

Builder confidence in the market for newly built, single-family homes rose two points to 15 as the future for home construction remains uncertain, the National Association of Home Builders (NAHB) said Monday. 

Any reading below 50 reflects negative sentiment about the housing market. The last time the index hit 50 was April 2006.

The gain mostly offsets a three-point dip recorded in June. The index has stayed within the same three-point range for nine out of the past 10 months. 

"We view the upward movement in the July HMI as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season," said David Crowe, chief economist with NAHB. 

Builders are struggling to compete in a housing market where the sales of distressed homes represent a better deal for home-buyers. 

"The strong rebound in sales expectations for the next six months likewise marks a return to trend," Crowe said. "Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve."

Despite the uncertain future, the index that shows sales expectations over the next six months increased by seven points, returning to the level it reached in April. 

The builders' monthly index is calculated from a survey that characterizes sentiments about current and future sales as "good," "fair" or "poor."

In May, new home sales fell to a seasonally adjusted annual rate of 319,000 homes, well below the 700,000 that represents a healthy market, according to the Commerce Department.

Many lawmakers argue that jobs won't return until the housing market improves. Each new home creates an average of three jobs a year and about $90,000 in taxes, according to NAHB.

The outlook among builders is uneven across the country. In the South and West, the index rose three points. In the Midwest, the index was up one point to 12. In the Northeast, it fell two points, to 15, its lowest point in seven months.