Home Builder Confidence Falls Again. Forward Looking Outlooks Weaken

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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.

Excerpts taken from the release...

Builder confidence in the market for newly built, single-family homes edged down for a third consecutive month in August. The HMI declined one point to 13, its lowest level since March of 2009.

Three out of four regions posted HMI declines in August. A six-point decline to 18 in the Northeast partially offset a big gain in that region in the previous month, while the South and West each posted one-point declines to 13 and 8, respectively. The HMI for the Midwest held even at 15 in August.

Two out of three of the HMI’s component indexes fell in August.

  • The component gauging current sales conditions declined one point to 14, it's lowest level since June 2009.
  • The component gauging sales expectations for the next six months declined three points to 18, it's lowest level since March 2009. 
  • The component gauging traffic of prospective buyers held unchanged at 10.

NAHB Chairman Bob Jones says:

“Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren’t gaining any traction,” said “Meanwhile, many continue to report that problems with inaccurate appraisals, competition from the large number of distressed properties on the market, and tight consumer lending conditions are causing them to lose potential sales.”

NAHB Chief Economist David Crowe adds:

“Today’s report reflects single-family home builders’ concerns about current and future economic conditions and about the increasing hesitancy they are seeing among potential home buyers...It also reflects the frustration that builders are feeling regarding the effects that foreclosed property sales are having on the new-homes market, with 87 percent of respondents reporting that their market has been negatively impacted by foreclosures.”

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 home builders