"Consumers are exhibiting caution, and want to be on more stable financial footing before purchasing a home," said NAHB Chief Economist David Crowe. "On the bright side, the HMI component measuring future sales expectations has been tracking upward all year, mortgage rates remain low, and house prices are affordable. These factors should spur the release of pent-up demand moving forward."
Perhaps they should, but they haven't so far, as potential home buyers are still facing tight credit conditions and home prices are rising faster than income and employment growth. Sales of newly built homes in March, which represent signed contracts not closings, fell just over 11 percent month-to-month, according to the U.S. Census. Mortgage applications to purchase a home were flat in April, according to the Mortgage Bankers Association, suggesting April new home sales might be lower. The average loan size for a newly built home soared to a record $315,670, as builders continue to focus on higher end buyers, not entry level consumers.
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Builders are less confident overall, but their sentiment was strangely mixed, again indicative of the still floundering recovery. Of the NAHB index's three components, sales expectations in the next six months rose one point to 64, buyer traffic dropped one point to 39, and current sales conditions fell two points to 59.