'Unexpectedly.' Now, that's comedy. http://www.bloomberg.com/apps/news?pid=20601087&sid=aSGFRjuouGCU U.S. Homebuilder Confidence Unexpectedly Fell in June (Update1) Share | Email | Print | A A A By Shobhana Chandra June 15 (Bloomberg) -- Confidence among U.S. homebuilders fell unexpectedly in June, indicating that a recovery from the housing slump will be slow to develop. The National Association of Home Builders/Wells Fargo index of builder confidence decreased to 15 this month from 16 in May, the Washington-based NAHB said today. A reading below 50 means most respondents view conditions as poor. Builders from Hovnanian Enterprises Inc. to Toll Brothers Inc. continue to report losses as foreclosures mount, worsening the glut of unsold properties and driving down prices at the same time that borrowing costs are rising. Still, other reports show demand is starting to stabilize, which may eventually help residential construction become less of a drag on the economy. âThe housing recovery will be fairly modest and gradual,â said James OâSullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut, one of two economists in the Bloomberg survey to accurately forecast the homebuilder index. Rising mortgage rates, increases in household savings and the lingering effects of the credit crunch will hinder a recovery, he said. The Standard and Poorâs Supercomposite Homebuilding Index fell 2.5 percent to 202.48 at 1:40 p.m. in New York. The gauge has fallen 4.4 percent since the start of this year. The builder confidence index was forecast to increase to 17 this month, according to the median estimate of 40 economists surveyed by Bloomberg News. Projections ranged from 15 to 20. Index Details The index, which fell to a record low of 8 in January, averaged 16 in 2008. It was first published in January 1985. The confidence survey asks builders to characterize current sales as âgood,â âfairâ or âpoorâ and to gauge prospective buyersâ traffic. It also asks participants to gauge the outlook for the next six months. The builder groupâs index of current single-family home sales held at 14 for a second month. The gauge of buyer traffic stayed at 13 for the third straight time. A measure of sales expectations for the next six months dropped to 26 from 27, the first decrease since February. âThe housing market continues to bump along trying to find a bottom,â David Crowe, chief economist at NAHB, said in a statement. âBuilders are taking their cue from consumers, who remain uncertain about the economy and their own situation.â Builder confidence fell in the South, the countryâs largest housing market, sliding to 15 this month from 18 in May. It gained in the remaining three regions, led by the West, where it rose to 14 from 12. The Northeast increased to 20 from 19, while the Midwest showed a gain to 15 from 14. Borrowing Costs While rising unemployment is keeping buyers cautious, home sales may be past the worst declines. Figures from the National Association of Realtors showed the number of Americans signing contracts to buy previously owned homes rose 6.7 percent in April, the fourth increase in five months. Meanwhile, borrowing costs are climbing from record-low levels. The average rate on a 30-year home loan surged to 5.57 percent in the week ended June 5, the highest since November, according to the Mortgage Bankers Association. Mortgage delinquencies and foreclosure rates in the first quarter rose to the highest level since records began in 1972, figures from the mortgage bankers group showed in May. Toll Brothers, the largest luxury homebuilder, and Hovnanian, New Jerseyâs biggest builder, this month reported quarterly losses as revenue plunged. Still, both businesses narrowed their losses from a year earlier. âWith interest rates near historic lows and housing affordability near historic highs, it appears that some buyers are beginning to re-enter the new-home market,â Robert Toll, chairman and chief executive officer of Toll, said in a June 3 statement. To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net Last Updated: June 15, 2009 13:51 EDT
Still waiting for much more consolidation within this industry, there is just no way possible these companies can stand on their own going into the next few years. I was driving yesterday through a couple of cities where I live and the amount of open houses on the market was INCREDIBLE. You couldn't even drive more than a 1/2 mile before coming up on another open house, one apartment building that just converted into condos had 5 available showings alone. The prices alone had come down $30,000 to $50,000 over the last 6 months.
For us to have a strong recovery, we need inventories down.. So I view NAHB #s in the same light as building permits and lower inventories... The less the better, esp in the face of the next deluge of foreclosure supply. I find it more confusing that the equities tend to rally on data showing home builders are building more, getting more permits, etc.... Everyone knows (at least I thought) that the last thing we need in the face of this imminent foreclosure dump is extra new supply.
I think a lot of people assume an increase in supply is due to an increase in demand which is not always the case.
What state are you in S? I'm from Wyoming, and the WCDA (Wyoming Community Development Association) came up with some loan programs for essential occupations (police, fire, teachers, medical, military et al) with the loan amount cap of 237,000 and some income limitations, but the interest rates were killer starting at 2.5 and gradually working up to 4.5 and locking after year ten. There was over 20 million dollars in the program and it was gone in less than a week. Keep in mind that the total population of the state is around 550 k. It is a huge boost for the state, but if interest rates start to creep up again it will curtail any recovery. But it is a pretty good program, if I remember right it made the full payment on 220 k around $1100.00 a month.