Southern Homebuilders’ Outlook Dims

By:: Peter King | April 18, 2011

Homebuilders are feeling less confident about the outlook for construction of single-family homes this month, primarily due to increasing pessimism among southern homebuilders.

The National Association of Home Builders reported today that its Housing Market Index fell back one point in April, to 16. It’s the same mark the 100-point index has been at since last November, except for a one-point rise last month.

Confidence among home builders in the south, the largest regional market in the index, plummeted in April, declining four points to a reading of 15. Builder outlooks in the Northeast and Midwest actually improved during the month, with those regions posting two-point gains to 14 and 20, respectively. The West held steady at 17.

“While builders in some areas are starting to see a pickup in traffic of prospective home buyers, many consumers remain skittish about the health of the housing market and overall economy, particularly in view of recent legislative and regulatory proposals that could make it much harder to get a mortgage,” said NAHB Chair Bob Nielsen. “At the same time, builders are competing against a large number of foreclosed and distressed properties on the market, which are holding down prices and appraisals and making it tough for potential clients to sell their existing homes.”

The greatest sales activity for newly built homes appears to be occurring at the lower end of the market, where first-time buyers are not hindered by the need to sell an existing home, according to David Crowe, NAHB chief economist. Overall however, he said the spring buying season is getting off to a slow start.

The NAHB/Wells Fargo Housing Market Index asks homebuilders to rate their expectations for the next six months as “good,” “fair” or “poor.” A score over 50 indicates a generally positive outlook, whereas a lower score is more negative.

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