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Homebuilder Confidence Falls. Same Problems Persists After Tax Credit Expiration
Tuesday, June 15, 2010 11:08 AM
The National Association of Home Builders released the monthly Housing Market Index today.
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
After recording month over month improvements in April and May, home builder confidence declined in June. The Housing Market Index dropped five points to 17...
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This modest move lower is small in the grand scheme of things but still the largest month over month drop since November 2009 . The NAHB Housing Market Index is only 9 points above the record low print of 8.
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Excerpts from the release...
Each of the HMI’s component indexes recorded declines in June.
- The component gauging current sales conditions fell five points to 17.
- The component gauging sales expectations for the next six months declined four points to 23 (from a one-point downward revised index level of 27 in May)
- The component gauging traffic of prospective buyers fell two points to 14.
The HMI also posted losses in every region in June. The Northeast, which has the smallest survey sample and is therefore subject to greater month-to-month volatility, fell 17 points to 18 following a 14-point jump in May. The Midwest posted a three-point loss to 14, while the South also registered a three-point decline to 19 and the West fell four points to 15 from a revised May level of 19.
NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Michigan says:
“The home buyer tax credit did its job in stoking spring sales and we expected a temporary pull back in the builders’ outlook after the credit expired at the end of April...However, the reduction in consumer activity may have been more dramatic than some builders had anticipated, which resulted in their lower confidence levels.”NAHB Chief Economist David Crowe says:
“We expected some softening in the market following the expiration of the home buyer tax credit and this report seems to verify this assumption....In the coming months, an improving economy, rising employment, low mortgage rates and stabilizing home values should help the housing market move forward. But as today’s HMI data shows, builders still remain very cautious and are aware that several factors could impede the nascent housing recovery, including serious problems in obtaining financing for the production of housing, faulty appraisal practices and competition from short sales and foreclosed properties.”This is the same thing the NAHB was saying in January.
HERE is some content about the above mentioned appraisal issues
HERE is some content about short sales, foreclosed properties, and shadow inventory
HERE are some of the "incentives" being pushed by Realtors and homebuilders
(View More)
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