After remaining stagnant at a low level for the past six months, builder confidence in the market for newly built single-family homes dipped even lower to 13 in June, according to the National Association of Home Builders' (NAHB) latest Housing Market Index (HMI). The last time the index was this low was in September of 2010.
After remaining stagnant at a low level for the past six months, builder confidence in the market for newly built single-family homes dipped even lower to 13 in June, according to the National Association of Home Builders' (NAHB) latest Housing Market Index (HMI). The last time the index was this low was in September of 2010.
"Builders are being squeezed by the continuing weakness in existing-home prices-against which they must compete-as well as rising material costs," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "In addition to the ongoing impacts of distressed property sales on home prices, appraisal values and consumer confidence, rising costs for materials such as roofing, copper, wallboard, vinyl siding and other components have made it extremely difficult to construct a new home and sell it at a price that covers the costs."
Every HMI component fell in June. The component gauging current sales conditions and the component gauging traffic of prospective buyers each fell two points, to 13 and 12, respectively. The component gauging sales expectations in the next six months fell four points to tie its record low score of 15, which was set in February and March 2009.
Scores from each component of the HMI are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
"Potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements, and general uncertainty about the economy. Economic growth must pick up in order for housing to gain the momentum it needs to get back on track," said NAHB Chief Economist David Crowe.