Homebuilder confidence remains flat at depressed levels
Homebuilders continue to doubt stability in the housing market, as competition between distressed properties and new properties intensifies this homebuying season. The National Association of Home Builders/Wells Fargo (WFC) Housing Market Index remained unchanged at 16 in May. This is the sixth time in the last seven months the index sits at this level. The index measures builder perception of current single-family home sales and expectations for the next six months. An index reading higher than 50 indicates more builders view conditions as good. "Builder confidence has hardly budged over the past six months as persistent concerns regarding competition from distressed property sales, lack of production credit, inaccurate appraisals, and proposals to reduce government support of housing have continued to cloud the outlook," according to Bob Nielsen, president of Shelter Properties in Reno, Nev., and chairman of NAHB. The National Association of Realtors reported last week that distressed property sales accounted for 39% of all home sales nationwide in the first quarter, up from 36% a year earlier. Distressed properties are also dragging home prices down. NAHB Chief Economist Dave Crowe said 90% of builders surveyed in May are concerned about being able to sell existing inventory at a favorable price. NAR put the median home price in the first quarter at $158,700, down 5% from a year earlier. Two out of the three sectors of the index inched up from April. The current sales condition index rose to 16 and the prospective buyers index increased to 14. The index measuring how many sales builders expect in the next six months fell two points to 20. Regionally, the housing market indices vary. Homebuilders were the most confident in the South and West, both at an index of 16, followed by the Northeast (15), and the Midwest (14). Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.