Home builders lower expectations for future sales in first of four reports due this week on real estate market trends.
Confidence among home builders dipped in September, according to a monthly Housing Market Index released today by the National Association of Home Builders.
The index is one of four reports due out this week that will help investors, industry experts and policy makers look for signs of improvement in the latest housing market trends. The housing sector historically leads the nation out of recession, but the current market remains in a five-year slump creating a key drag on the economy.
The Housing Market Index fell by one point to 14 in September, and has held between 13 and 16 for six consecutive months, the builders association reports. According to Bob Nielsen, chairman of the association, “Very little has changed in terms of housing market conditions so far this year.”
Bright spots are emerging in about a dozen select metropolitan areas, but over all the “picture remains fairly bleak due to the weak economy and job market, “ said David Crowe, chief economist for the association. A glut of foreclosed properties, difficulty obtaining credit, low appraisals for new homes and weak consumer confidence have lowered builders’ expectations for future sales and traffic of prospective buyers, as well as current sales conditions.
Additional data describing current real estate market trends will be available tomorrow when the Census Bureau releases figures on new home construction for the month of August. Housing starts fell a disappointing 3.2 percent in July, but were 3.8 percent higher than in July 2010.
Real estate market trends for existing home homes will be updated on Wednesday then the National Association of Realtors releases information on sales of previously owned homes. Existing home sales declined by 3.5 percent in July despite record low interest rates and depressed prices that are making homes the most affordable they’ve been since 1970.
“Many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,” said Lawrence Yun, chief economist for the realtors association. “Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs.”
Completing this week’s report on real estate market trends, the Federal Housing Finance Authority will release its monthly Home Price Index. Over the past four quarters seasonally adjust prices fell 5.9 percent, according to data released by the authority in August.