The spring home purchasing season may be off to a slow start, as homebuilder confidence slipped back into a five-month holding pattern, according to a report released Monday.
Builder confidence fell to a score of 16 this month after climbing to a year-high of 17 in March, as the National Association of Homebuilders/Wells Fargo Housing Market Index reports.
The index, which tracks homebuilder confidence in new single-family home construction, has remained flat at 16 for five of the past six months. An uptick in March seemed to suggest that spring home buying interest was beginning to pick up, but prevailing obstacles in the housing market continue to keep buyers on the sidelines.
“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,” said NAHB Chairman Bob Nielsen in a press release. “Particularly in view of recent legislative and regulatory proposals that could make it much harder to get a mortgage.”
New home construction continues to be bogged down by a glut of foreclosed and distressed properties on the market, Nielsen added, which both hurt home values and make it difficult for potential buyers to sell their current homes.
Commonly speaking, a score of 50 or higher on the NAHB Housing Market Index indicates that a majority of homebuilders view the market favorably. The market has not passed this threshold since April 2006, when home prices in many markets were at their peak.
Of the three indices measured in the NAHB report, the only component to show growth was the index that gauges traffic of potential buyers – it rose a single point to 13, it’s highest level since last June.
On a regional level, the South recorded the hugest drop, falling four points to a score of 15. The Northeast and Midwest rose two points to 20 and 14, respectively, while the West remained flat at 17.
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