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Builder Confidence in Condo Market Continues to Shrink
Builder confidence in the market for condominiums continued to fall during this year’s second quarter, according to NAHB’s Multifamily Condo Market Index (MCMI), which was released on Aug. 8, leaving two of its three components at their lowest levels since the index was created in 2002.
"Like the market for single-family homes, the housing slump and the recent turmoil in the financial markets are also distressing the condo market," said NAHB Chief Economist David Seiders. "The hope now is that the housing stimulus bill signed into law last by the President will support a much-needed turnaround in all sectors of the housing market, including condos."
The milestone legislation is expected to bring a substantial boost to the housing industry in the form of a temporary tax credit for first-time home and condo buyers, as well as much-needed measures that will improve mortgage liquidity, foster refinancing of troubled loans and expand the supply of affordable rental housing.
The newly enacted legislation offers first-time home and condo buyers a tax credit of up to $7,500 for closings on purchases from April 9, 2008 and before July 1, 2009.
The MCMI is derived from a quarterly survey of multifamily builders and developers, and the index is rated on a scale of 0 to 100, with a rating of 50 generally indicating that the number of positive and negative responses are about the same.
Condo developers reported that traffic of prospective condo buyers declined in the second quarter, pushing the MCMI component that tracks demand down to 28.1, nearly nine points below the 36.8 level for the same period a year earlier.
The component of the index tracking supply fell to a record low of 10, down from 18 during the second quarter of 2007.
Builder expectations for the next six months slid to 21.0, down from 26.3 during the same time a year ago.
For more information, e-mail Ann Marie Moriarty at NAHB, or call her at 800-368-5242 x8350.
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