Homebuilders Concerned That Poor Economy Will Continue To Deter Buyers

A weak economy and high unemployment rates have many US builders concerned about potential buyer activity in 2010. Despite favorable market conditions, and federal tax incentives, experts believe …

A weak economy and high unemployment rates have many US builders concerned about potential buyer activity in 2010. Despite favorable market conditions, and federal tax incentives, experts believe that the poor economy and tight lending conditions may continue to deter potential buyers from entering the market. See the following article from HousingWire for more on this.

In yet another study of builder confidence and sector outlook this week, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) declined as continued weakness in the economy and job markets has builders concerned about the activity of potential buyers.

The December index of builder perceptions of current single-family home sales and sales expectations for the next six months declined one point from the previous to 16, its lowest point since June of this year.

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Builders rate the current and projected sales as “good,” “fair” or “poor.” Builders also rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” The results are calculated into a numerical score where any number over 50 indicates that more builders view sales conditions as good than poor.

“As we anticipated, this is shaping up to be a bumpy recovery period for the housing market,” said NAHB chief economist David Crowe. “While some families may be just starting to factor the expanded tax credit into their potential home buying plans, many are hesitating because of the poor economy. At the same time, tight lending conditions for both consumers and home builders continue to pose considerable obstacles on the road to a sustained housing and economic recovery.”

The component index for current sales condition was also down one point to 16. The six-month sales projections index was down two points to 26. The index for gauging traffic of prospective buyers held steady for the third consecutive month at 13.

Regionally, the Northeast composite index increased three points to 23, the West experienced a one point gain to 19. The South held steady at 17 and the Midwest declined two points to 12.

“From an affordability standpoint, rarely has there been a better time in history to purchase a home, thanks to record low interest rates, attractive prices, and of course the recent extension and expansion of the home buyer tax credit,” said Tulsa, Okla. home builder and NAHB chairman Joe Robson. “However, builders are not seeing the full impact of these conditions on buyer demand, partly because awareness of the latest incentives is still building, and partly because of concerns about job security and other economic woes.”

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