Builder Confidence Remains Weak says NAHB

For the fourth consecutive month, builder confidence in the market for new, single-family homes remained unchanged at 16 in February, according to this month’s National Association of Home Builders/Wells Fargo Housing Market Index.

The index is based on a monthly survey that NAHB has been conducting for more than 20 years. It serves to gauge builder sentiment on single-family home sales, and get a sense of sales expectations for the coming six months. Tight credit continues to stifle new construction, among other challenges.

“While builders are starting to see more interest among potential home buyers, we are also dealing with a multitude of challenges, including competition from foreclosure properties and inaccurate appraisals of new homes, which are limiting our ability to sell,” said NAHB Chairman Bob Nielsen, who is a home builder from Reno, Nev. “On top of that, an extremely tight lending environment continues to make it almost impossible to obtain credit for viable new and existing projects, and most do not see that situation improving anytime soon.”

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Scores from survey components are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Regionally, HMI scores were mixed in February. The Northeast region saw a two-point gain to 22, the Southern region posted a one-point gain to 18, the Midwest saw a one-point decline to 12 and the West posted a two-point decline to 13.

For the full index report, visit NAHB.org.

Written by Elizabeth Ecker

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  • This is very telling for the immediate future of HECMs for Purchase. It certainly indicates there will not be many new case number assignments for them before June 1, 2011 when the normal application period expires for purposes of pull through into endorsement before October 1, 2011.

    It also does not bode well for the near future of endorsement production for fiscal 2012. Six months carries us right into the end of the peak for new home construction during summer 2011. At this late date that means few builders are working towards any significant new home construction until at least summer 2012.

    While new home production normally lags slightly behind demand, demand must be anticipated so that the supply of homes is reasonably ready when buyers are demanding them.

    These surveys provide better insight into the market than the statements by NAR. The pessimism expressed in the article above certainly is not good but it at least provides a gauge as to expectations.

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