Builder sentiment sinks to new lows

Posted on July 18, 2007 by grim

From Reuters:

Builders’ confidence drops to 16-year low

US home builder sentiment slid in July to its lowest since January 1991 as fallout from the housing slump and subprime mortgage crisis caused a glut of new homes, the National Association of Home Builders said yesterday .

The NAHB/Wells Fargo Housing Market index fell to 24 from 28 in June, the group said. Economists polled by Reuters had thought it would slip to 27. Readings below 50 mean more builders view market conditions as poor than favorable.

“The bottom line is that the single-family housing market is still in a correction process following the historic and unsustainable highs of the 2003-2005 period,” NAHB chief economist David Seiders said in the statement.

Home builders are struggling to unload excess inventories left to them as speculators abandon contracts and buyers find it harder to obtain mortgages. Soaring delinquencies on the riskiest loans have forced lenders to boost requirements for many borrowers, locking out customers who might previously have qualified, analysts said.

Affordability problems are persisting even as builders cut prices and offer buyer incentives, Seiders said.
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Declines were seen in all four regions of the United States, with the Northeast and South registering the largest drops.

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23 Responses to Builder sentiment sinks to new lows

  1. cliffy says:
    July 18, 2007 at 3:40 pm

    I have unrealted question to the thread.
    I am making an offer on a house in Northvale . Any input regarding this twon will be appriciated.

  2. Chiato says:
    July 18, 2007 at 4:43 pm

    Hi Cliffy,

    I am not a market expert but I am utilizing the following sites to research the current market. Couple these with the information available in this site and I feel that I have an accurate view.

    If you haven’t already done so, read through this site. It offers a ton of information and resources.

    I use the realtor.org for economic indicators such as affordability indexes etc..

    http://www.realtor.org/research.nsf/pages/EcoIndicator?OpenDocument

    I use the “window to my environment” to see how far from a hazard area the property sits. i.e. flood zones etc…Just type in your zip code and find your properties location. On the right is a tool bar. At the bottom of the tool bar select “topographic features” and then select all three possible selections. click redraw map and you will see flood regions and elevations.

    http://www.epa.gov/enviro/wme/

    I use zillow to to get a glimpse at the approx property value….”according to zillow”. You have to read zillows “how we get the value” etc to understand it but nevertheless it gives an idea of the market value.

    http://www.zillow.com/

    Hope that helps.

  3. Chiato says:
    July 18, 2007 at 4:49 pm

    Cliffy,

    One more thing. I personally have not read one positive indicator in respect to the housing market. I have only read that the market will continue to decline for the next year or at least until the subprime mess has been dealt with.

  4. bruiser says:
    July 19, 2007 at 1:30 am

    Builder sentiment can be summed up in the infamous words of the CEO of D.R. Horton: “I don’t want to be too sophisticated here, but 2007 is going to suck, all 12 months of the calendar year,”

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