Echoing similarly rosy readings from other segments of the housing market, Homebuilder confidence jumped in April to 14 from 9. According to Bloomberg, this is the biggest jump since May 2003. Economists, which continue to be lost in the woods when it comes to predicting housing data, were expecting the index to come in at 10.

Much has been made of the recent spike in home sales, which many pundits and so-called real estate experts are pointing to as a sign of an imminent bottom in the housing market. Evidently, homebuilders are drinking the same cool aid.

David Crowe, chief economist at the National Association of Homebuilders, said today “This is a very encouraging sign that we are at or near the bottom of the current housing depression. Some of the most favorable buying conditions in a lifetime are now in place, and they are drawing more consumers back to the market.”

As housing prices continue to spiral downward, foreclosures flood the market and job losses rise, we boldly question this assertion. To be sure, there are deals to be had, but by in large most homes in this country remain overpriced.

As one senior economist told Bloomberg, “Builders are generally a hopeful bunch, so it is no surprise that the stabilization in the broader economy fed through to the confidence index. We would only caution that hope is a soft foundation.”

Or, to quote Todd Harrison from Minyanville.com, “Hope is not a viable investment strategy.”

Tags: confidence, homebuilders, NAHB

This entry was posted on Wednesday, April 15th, 2009 at 11:32 am and is filed under Housing Perspective. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.