Builder Confidence Remains Steady
The National Association of Home Builders reported its builder sentiment index for March is the same as February’s revised rating of 28. The leveling-off followed five straight months of increases to the highest level it’s been since June 2007. Some economists had predicted a reading of 30 for this month.
Builders expressed higher confidence in sales for the next six months. That separate index rose from 34 to 36, for the sixth straight month.
Builders continue to struggle with competition from foreclosed homes, which have driven demand for new homes down. Home prices continue to fall in many markets, forcing builders to slash prices, as well.
Other issues facing home builders are slow sales of existing homes and low appraisals that affect completion of new sales contracts. Many people are canceling deals after receiving a low appraisal on their existing homes, or holding off on new home contracts because they can’t sell their current home.
Overall, it looks like builders remain cautious but have a sense that many local housing markets are starting to move forward, and prospects for future sales are good. Still, an index of 28 is well below the 50 mark, which is where negative sentiment about the housing market turns positive.
The next housing market indicators to come are new home construction on Tuesday, existing home sales on Wednesday and new home sales on Friday.