Wednesday, March 16, 2011

BUILDER CONFIDENCE STILL AT LOW POINT

The NAHB Housing Market Index Rose By a Point to 17.  The National Association of Home Builders Housing Market Index has been 20 or lower since September 2007, after being as high as 72 in June 2005.


In March the HMI inched up to 17 from 16 where 50 is the neutral zone, so home builders have been in a depressed mood since May 2006, when this index first dropped below 50. 

Today home builders face the same obstacles talked about in the last several reports; competition from short sales and foreclosures, potential new home buyers’ inability to sell existing homes, home appraisals falling below the costs of new construction, and tough lending standards for both home builders and home buyers.

Economies on Main Street USA depend upon the construction industry, and the housing market is a major component of this. Community banks are reluctant to lend to home builders, as they still have $321.6 billion in Construction & Development loans on the books, where collections are problematic.

Construction & Development Loans are down $307.4 billion since the end of 2007, or 48.9% and the NAHB is worried that this contraction in construction lending will force more small builders out of business resulting in more job losses industry wide and across the country.

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