Home Builders' Sentiment Falls in March as Mortgage Concerns Broaden
Deepening problems in the subprime mortgage sector, which specializes in loans to borrowers with weak credit histories, chipped away at U.S. homebuilder confidence in March, the National Association of Home Builders said.
The NAHB/Wells Fargo Housing Market index fell three points in March to 36 from a downwardly revised 39 a month earlier, the group said.
While the March reading was up from a 15-year low of 30 in September 2006 as five years of double-digit home price gains and rising interest rates squeezed affordability, it came in well below a reading of 54 in the same month a year ago.
Readings above 50 mean more builders view market conditions as favorable rather than poor.
"Builders are uncertain about the consequences of tightening mortgage lending standards for their home sales down the line, and some are already seeing effects of the subprime shakeout on current sales activity," said NAHB Chief Economist David Seiders.
Economists polled by Reuters had forecast the index would drop to drop to 38 from an originally reported 40 in February.
Several dozen companies have closed shop in the past year in the subprime sector, battered by borrower defaults and demand from the companies' own lenders to take back soured loans at a loss.