By Mike Colpitts
The roller coaster ride in the U.S. real estate market got more evidence of continuing as the new home builder index for single family homes declined for the first time in seven months in April, according to the National Association of Home Builders-Wells Fargo index.
The home builders index declined three notches to 25 reaching the level where it was in January, the highest it had been since 2007.
“Although builders in many markets are noting increased interest among potential buyers, consumers are still very hesitant to go forward with a purchase,” said National Association of Home Builders chairman Barry Rutenberg. “Our members are realigning their expectations somewhat until they see more actual signed sales contracts.”
Rutenberg and fellow new home builders wonder what the spring home buying season has in store.
“What we’re seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September,” said NAHB chief economist David Crowe. Near record low mortgage rates are doing little to get worried home buyers off the fence.
“This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery, particularly tight credit conditions for builders and buyers, competition from foreclosures and problems with obtaining accurate appraisals.”
The builder index gauges home builder perceptions on current single family home sales in the U.S. real estate market and sale expectations for the next six months as good, fair or poor. Components gauging current sales and expectations for home sales in the next six months fell three points.
A pent up supply of bank assisted short sales and a back log of foreclosures that have not yet been formally foreclosed by lenders trouble the housing market, especially in the hardest hit regions of the U.S.