Confidence among U.S. home builders barely grew in February from its record low, signaling that the housing slump continues.
The National Association of Home Builders/Wells Fargo index of builder confidence rose to 9, higher than forecast, from 8 in January, the Washington trade group said on Tuesday. A reading below 50 means most respondents view conditions as poor.
"Home builders are especially concerned about the continually rising number of foreclosures and short sales, which are flooding the market with excess inventory," David Crowe, the builder group's chief economist, said in a press release.
The index was expected to hold at 8 this month, according to the median of 44 estimates in a Bloomberg News survey.
The gauge was first published in January 1985 and averaged 16 last year.
The confidence survey asks builders to characterize current sales as "good," "fair," or "poor" and to gauge prospective buyers' traffic. The survey also asks participants to gauge the outlook for the next six months.
The index of sales expectations for six months from now fell to 15 this month, a record low, from 17 in January. The gauge of current single-family home sales rose to 7, from 6, and the measure of buyer traffic increased to 11, from 8.
"People are looking for deals out there because they feel it is a buyer's market," said Leif Thomsen, the chief executive officer of Mortgage Master, a Walpole, Mass., lender. "The activity has gotten a lot better. It hasn't necessarily materialized into sales yet."
Builder confidence grew in three of four regions in February, led by a gain in the Midwest. Sentiment declined in the Northeast.
The Commerce Department is to release its report on January housing starts today, and economists surveyed by Bloomberg News projected a 530,000 annual rate, a record low.
Toll Brothers Inc., the home builder, said last week that its first-quarter revenue plunged 51%.
Chief executive Robert Toll said on a Feb. 11 conference call that prospective buyers are worried they may lose their jobs and be unable to sell their existing homes.