Builders views on housing market remain unchanged

“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.” 

Any reading below 50 indicates negative sentiment about the market. The index hasn’t been above that level since April 2006.

About 90 percent of the builders surveyed said potential buyers are also holding back on purchases because they are concerned they won’t be able to sell their current home at a favorable price, while 73 percent said consumers think it will be difficult for them to get financing. 

“Clearly, access to credit for both builders and buyers remains a considerable obstacle to the revival of the new-homes market,” said NAHB Chief Economist David Crowe.  

The housing industry, battling rising foreclosures, dropping prices and tight credit, saw sales of new homes hit their lowest level in 50 years, while sales of previously owned homes dropped to a 13-year low in 2010.

When asked about where they see sales of single-family home heading over the next six months, the builders offered their most pessimistic outlook since September.

Builders are struggling to compete because foreclosures are forcing down prices for previously occupied homes. The median price of a new home was about 34 percent higher in March than the median price for a resale. That’s more than twice the markup in healthy housing markets.

In response, builders are breaking ground on fewer homes. The seasonally adjusted annual pace in March was 549,000 new homes per year, less than half the 1.2 million units annually that economists consider healthy. 

The Commerce Department will release the April data on new-home construction Tuesday.

Fewer new homes mean fewer jobs. Each new home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the builders’ trade group.

The index gauging current sales conditions and the index gauging traffic of prospective buyers inched up one point in May, to 16 and 14, respectively. While still very low, the traffic gauge is now at its highest point since May of 2010. 

Meanwhile, the index gauging sales expectations in the next six months declined two points to 20 in May, the lowest level in eight months, according to the report. 

Regionally, the Northeast posted a five-point decline to 15, the Midwest had no change at 14, the South showed a one-point gain to 16, and the West posted a two-point decline to 16.