Home builders’ confidence remains unchanged in May

Builder confidence in the market for newly built, single-family homes held unchanged at the low level of 16 in May, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The index has now remained at the same level for six out of the past seven months.
“Builder confidence has hardly budged over the past six months as persistent concerns regarding competition from distressed property sales, lack of production credit, inaccurate appraisals and proposals to reduce government support of housing have continued to cloud the outlook,” said NAHB chairman Bob Nielsen, a home builder in Reno, Nev. “In addition, many builders in this month’s survey cited high gas prices as a further contributor to consumer anxiety and reluctance to go forward with a home purchase.”
NAHB chief economist David Crowe said prospective buyers have shown an increased interest, but continue to be “extremely hesitant due to a number of factors”. Reasons cited by builders for potential customers holding back include being able to sell their existing home at a favorable price and expected difficulty in obtaining financing.
“Clearly, access to credit for both builders and buyers remains a considerable obstacle to the revival of the new-homes market,” Crowe said.