The National Association of Home Builders/Wells Fargo Housing Market Index found that builder confidence in the market for newly built, single-family homes slipped back one notch to 16 for April. The index has now held at 16 for five of the last six months.
“While builders in some areas are starting to see a pickup in traffic of prospective home buyers, many consumers remain skittish about the health of the housing market and overall economy, particularly in view of recent legislative and regulatory proposals that could make it much harder to get a mortgage,” said NAHB chairman Bob Nielsen, a home builder from Reno, Nev. “At the same time, builders are competing against a large number of foreclosed and distressed properties on the market, which are holding down prices and appraisals and making it tough for potential clients to sell their existing homes.”
NAHB chief economist David Crowe said the spring home buying season is starting slowly “due to persistent concerns about home values as more foreclosures seem to be hitting the market, increasingly restrictive lending requirements for home buyers and builders, and the slow pace of economic recovery.”
Crowe said the best sales activity is happening in the lower price ranges, where first-time buyers have greater flexibility than repeat buyers who must sell their current home.
“Consumers who can take advantage of today’s low mortgage rates and very attractive pricing are finding bargains and are buying,” he said.
The South, which is the largest regional housing market represented in the HMI, was primarily responsible for the overall index’s decline in April. While that region dropped four points to 15, the Northeast and Midwest registered two-point gains to 20 and 14, respectively, and the West registered no change from the previous month, at 17.