Builder confidence in the market for newly built, single-family homes fell back two points to 15 in March as poor weather conditions and distressed property sales posed increasing challenges to both builders and buyers, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index, released Monday.
In declining two points to 15 this March, the HMI returned to where it was in January 2010, losing the ground it had gained in the intervening month.
Each of the HMI’s component indexes fell in March; the component gauging current sales conditions declined two points to 15, while the component gauging sales expectations in the next six months declined three points to 24.
The component gauging traffic of prospective buyers declined two points to 10.
Regionally, the HMI results were mixed in March. While the Northeast posted a five-point gain to 23 and the West posted a one-point gain to 15, the Midwest HMI slid three points to 10 and the South HMI edged down one point to 18.
“The lack of available credit for new projects, the large number of distressed properties for sale and the continuing hesitancy of potential buyers due to the weak job market are definitely weighing on builder confidence at this time,” said NAHB Chief Economist David Crowe.
“That said, the inventory of new homes on the market is at an extremely low level, and we do expect a 25 percent improvement in new-home construction in 2010 over 2009 to rebuild inventory and meet expected pent-up demand," said Crowe.