Builders See Business Getting Better – Just not Right Now

by devteam April 15th, 2013 | Share

Despite a revival of demand for new homes, builders arernfacing constraints that are eroding their confidence in the market for newrnsingle family homes.  The NationalrnAssociation of Home Builders (NAHB) Housing Market Index (HMI) produced jointlyrnwith First American Title dropped in its April, along with two of its three componentrnindices.  NAHB said that the drop in therncomposite from 44 to 42 comes as builders face increasing costs for buildingrnmaterials and rising concerns about the supply of developed lots andrnlabor.   </p

“Many builders are expressing frustration over beingrnunable to respond to the rising demand for new homes due to difficulties inrnobtaining construction credit, overly restrictive mortgage lending rules andrnconstruction costs that are increasing at a faster pace than appraisedrnvalues,” said Rick Judson, National Association of Home Builders (NAHB)rnChairman. “While sales conditions are generally improving, thesernchallenges are holding back new building and job creation.”</p

The monthly NAHB survey asks home builders for theirrnperception of current single family home sales and their expectation for those salesrnover the next six months on a scale of “good,” “fair” orrn”poor.” They are also asked to rate the traffic of prospective buyersrnas “high to very high,” “average” or “low to veryrnlow.” Scores for each component are then used to calculate a seasonallyrnadjusted index where any number over 50 indicates that more builders viewrnconditions as good than poor.<br /<br /While the HMI component gauging current sales conditions declined two points torn45 and the component gauging buyer traffic declined four points to 30 in April,rnthe component gauging sales expectations in the next six months posted arnthree-point gain to 53 – its highest level since February of 2007.</p

“Supply chains for building materials, developed lotsrnand skilled workers will take some time to re-establish themselves followingrnthe recession, and in the meantime builders are feeling squeezed by higherrncosts and limited availability issues,” explained NAHB Chief EconomistrnDavid Crowe. “That said, builders’ outlook for the next six months hasrnimproved due to the low inventory of for-sale homes, rock bottom mortgage rates</aand rising consumer confidence."</p

Regional responses to the survey are viewed as three-monthrnmoving averages.  The composite score forrnthe Northeast was unchanged at 38 in April but the other three regions fell;rnthe Midwest by two points to 45, the South by four to 42, and the West by threernpoints to 55.

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