A report released by the National Association of Home Builders (NAHB) indicates that the market sentiment index among US home builders has fallen by 1 (from 15 to 16) in their June survey. Many factors appear to support this fall:
– foreclosures have increased
– the home for sale:home sold period is now greater than 10 months, a large number for the housing industry
– mortgage rates have increased dramatically in recent weeks
– new home sales have increased
– housing prices are down 15% in April year over year
and, perhaps most importantly for those participating in the survey, home construction was down 13% in April vs. March. Construction year over year was at less than half of the April 2008 levels.
It is therefore unsurrpising that home builders are not optimistic about the market right now, especially since new properties to continue to compete against old properties, and the depreciation occuring and difficulty of selling homes does not make building new properties a sure bet.