April 18, 2011
Nation's Building News

The Official Online Newspaper of NAHB

Economics and Finance
Builders Lack Confidence in April Despite Pockets of Improvement

Builder confidence in the market for newly built, single-family homes slipped back one notch to 16 on the NAHB/Wells Fargo Housing Market Index (HMI) for April, which was released on April 18.

The index has now held at 16 for five of the last six months.

"While builders in some areas are starting to see a pickup in traffic of prospective home buyers, many consumers remain skittish about the health of the housing market and overall economy, particularly in view of recent legislative and regulatory proposals that could make it much harder to get a mortgage," noted NAHB Chairman Bob Nielsen.

"At the same time, builders are competing against a large number of foreclosed and distressed properties on the market,” Nielsen said, “which are holding down prices and appraisals and making it tough for potential clients to sell their existing homes."

"The spring home buying season is getting off to a slow start due to persistent concerns about home values as more foreclosures seem to be hitting the market, increasingly restrictive lending requirements for home buyers and builders, and the slow pace of economic recovery," said NAHB Chief Economist David Crowe.

"While pockets of improving activity are appearing in some markets,” Crowe said, “the best sales activity appears to be happening in the lower price ranges, where first-time buyers have greater flexibility than repeat buyers who must sell their current home.

“Consumers who can take advantage of today's low mortgage rates and very attractive pricing are finding bargains and are buying," he said.

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers.

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

Two out of three of the HMI's component indexes posted declines in April.

The component on current sales conditions fell one point to 16, and sales for the next six months declined three points to 23, this component's lowest mark since October of 2010.

Traffic of prospective buyers rose a single point to 13 in April, — its highest level since last June.

The South — which is the largest regional housing market represented in the HMI — was primarily responsible for the overall decline in the index this month, dropping four points to 16.

Register for Spring Construction Forecast Webinar on April 27

The NAHB Spring Construction Forecast Webinar will provide attendees with up-to-the-minute analysis of the latest housing numbers and market trends right to their desktop. The webinar will be held from 2:00-4:00 p.m. EDT on Wednesday, April 27.

Speakers David Crowe, NAHB chief economist; Mark Zandi, chief economist with Moody's Analytics; and Robert Denk, NAHB’s assistant vice president for forecasting and analysis, will address issues affecting the housing industry and the economy — including competition from short sales and foreclosures, consumers' inability to sell their existing homes, appraisals coming in below construction costs, and restrictive lending conditions for buyers and builders — and how builder confidence and the market may evolve as those factors change.

The fee is $29.95 for NAHB members and home builders associations and $49.95 for non-members.

To Register

For more information and to register, visit www.nahb.org/cfw.

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The Northeast and Midwest each saw two-point gains, to 20 and 14, respectively, and the West remained unchanged at 17.

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