Home Builder Confidence Falls, Mortgage Concerns to Blame
Problems in the bad credit mortgage market continued to take their toll on home builder confidence regarding the housing market in April, an industry trade group reports.
The monthly National Association of Home Builders/Wells Fargo Housing Market Index declined 3 points to 33 in April, its lowest level since December.
A number over 50 indicates that more home builders view sales conditions as good than as poor. In other words, more are feeling negatively at this time than are not. Home builder stocks were mixed after the report was released Monday.
“The tightening of mortgage lender standards in connection with the [bad credit mortgage] crisis has shaken the confidence of both consumers and builders, as reflected in this report,” said the National Association of Home Builders Chief Economist, David Seiders, in a statement.
“Indeed, the unfolding effects of this crisis have compelled NAHB to trim our forecasts of home sales and housing production for both 2007 and 2008,” he said.
“While we still expect to see some improvements in housing market activity later this year, the downside risks and uncertainties surrounding that forecast are considerable.”
The index gauging current single-family home sales fell three points to 33, while the index gauging sales expectations for the next six months declined six points to 44.
The index gauging traffic of would-be buyers declined a single point to 27, reflecting the declining home mortgage activity and increased problems within the home loan lending industry.
There were builder confidence declines stemming from all four of the U.S. regions in April, with the Midwest index registering the biggest decline - five points - to 22.
The Northeast showed a one-point decline to 38, the South posted a three-point decline to 37, and declining prospects among home builders in the West region prompted a two-point decline to 35.
“The [bad credit home loan] market shakeout clearly is a serious matter for the single-family housing market,” said the former NAHB President, Brian Catalde, a home builder from El Segundo, Calif., in a statement.
“Home builders across the U.S. are reporting adverse effects on sales and contract cancellations at this time, and it remains to be seen how serious these effects will be as we move through the spring home buying season.”
SOURCE: TheStreet.com