Builders Continue to Lose Confidence in Market

September 19, 2011

Not surprisingly, builder confidence in new homes fell this month, though only by one point.

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for September was released Monday to show that builder confidence in the market for newly built, single-family homes dropped one point to 14 in September.

construction hat sitting on a postThe index has been between 13 and 16 for the past six months, thanks to the fact that a huge inventory of existing homes and foreclosures at rock-bottom prices has kept what home buyers are willing or able to invest in this economy away from new construction.

“Very little has changed in terms of housing market conditions so far this year,” said NAHB Chairman Bob Nielsen. “Builders continue to confront the same challenges in accessing construction credit, obtaining accurate appraisal values for new homes, and competing against foreclosed properties that they have seen for some time. Beyond this, both builder and consumer confidence took a hit in recent weeks with the market disruptions caused by the S&P downgrade and congressional gridlock on the budget deficit.”

Each HMI component index fell in September as well:

*The component gauging current sales conditions fell one point to 14.

*The component gauging traffic of prospective buyers feel two points to 11.

*The component gauging sales expectations in the next six months fell two points to 17.

There is a bright side for us Chicago real estate fans: The Midwest was the only region in the country to post a gain in September, moving up one point to 11.

The Northeast and South each fell two points to 15 and the West dropped three points to 12.

“The fact that the HMI continues to hover within such a narrow, low range reflects builders’ awareness that many consumers are simply unwilling or unable to move forward with a home purchase in today’s uncertain economic climate,” said NAHB Chief Economist David Crowe.

“While some bright spots are beginning to emerge in about a dozen select metro areas, the broader picture remains fairly bleak due to the weak economy and job market.”

Categories: Economy, New Homes

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