Homebuilder confidence still low

By Sari R. Updated on 4/15/2013

According to the National Association of Home Builders Housing Market Index, short supplies of developed lots and heightened costs for building materials have officially taken their toll on homebuilder confidence.

Because of this, the index was pushed to 42 in April, down from 44 in March.  In December and January, the index saw a recovery peak of 47.

Analysts from Econoday say that the new home market’s upswing may be short since April is the lowest index reading since October.  In addition, the outcome is below Econoday’s lowest estimate for the second month in a row.  Since the last two months have seen nothing but a declining index, the majority of homebuilders have been seeing conditions as bad as opposed to good.

One of the biggest frustrations for homebuilders right now is their inability to meet the rising demand for new homes.  This challenge is a result of the fact that construction credit is difficult to obtain, lending rules have become overly stringent, and construction costs are exceeding the cost of the appraised values.

The index’s HMI component dropped to 45 in April, dropping two points lower than the previous month.  The buyer-traffic component dropped four points in the last month, down to 30.  Despite this, however, builders have been appearing confident about sales expectations in the next half of the year, as that saw a three-point gain.  This is the highest level since February of 2007.

The South saw their HMI component decline four points, and the West saw theirs drop three points.  The Midwest fell two points and the Northeast is unchanged.

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