Economic Reports Released Today Show the Effects of Tight Credit, Rising Prices and the National Debt
Tight credit and difficulty selling an existing home are discouraging Americans from buying newly built homes, a persistent trend that is keeping builder confidence at a low level of 16 in May.
Builder confidence has remained at 16 for six of the past seven months, according to the National Association of Home Builders/Wells Fargo Housing Market Index released today. The index measures builders’ perceptions of current sales, their expectations for sales over the next six months and interest from prospective buyers. An index higher than 50 indicates more builders view sales conditions as good than poor.
The index measured a slight increase in prospective buyers, but most of them remained extremely hesitant. Ninety percent of builders say clients worry they won’t be able to sell their existing home at a good price, and 73 percent think they will have trouble obtaining a mortgage.
“Clearly, access to credit for both builders and buyers remains a considerable obstacle to the revival of the new-homes market,” said David Crowe, NAHB chief economist.
In other economic news, the Federal Reserve of New York reported that conditions for Empire State manufacturers are still improving, but at a slower rate. The general conditions index, new orders and shipments all fell from April to May, and inventories rose. The prices manufacturers paid rose to 69.9, the highest level since mid-2008.
Manufacturers continued to express a high level of optimism about the outlook for the next six months, though they expect prices to continue rising.
The Treasury today reported that foreign holdings of short-term U.S. debt fell 18.3 billion in March. Foreign holdings of Treasury bills decreased $21.9 billion.