Builders’ Sentiment Unchanged

The NAHB/Wells Fargo Housing Market Index remained at 15 in August, the same as July. In fact, except for several months near the ends of the home buyer tax credits in 2009 and 2010, the index has revolved within 2 points of 15 for more than three years. Of the three components, the only one to decline from July to August was expectations for the next 6 months, which fell from 21 to 19.
Builders cited competition from foreclosures as a leading cause behind the continued weakness. Indirectly, the same barrier has limited the ability of potential new home buyers in selling their existing home. Builders also reported that their buyers were unable to get mortgage financing and that appraisals came in below the contract price.
As a result, about one-third of the builders reported contract cancellations and most reported that 6% or more of their signed contracts had been cancelled. Three-quarters of the builders said the current cancellation rate was no different than it was six months ago, while 17% said the rate had increased.



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