Subprime Woes Drag Down Homebuilder Confidence
U.S. homebuilder confidence stumbled in March for the first time in six months as the subprime mortgage meltdown makes it more difficult for consumers to qualify for loans, according to a report from the National Association of Home Builders released this week.
Subprime Woes Drag Down Homebuilder Confidence
By Evelyn M. Rusli
U.S. homebuilder confidence stumbled in March for the first time in six months as the subprime mortgage meltdown makes it more difficult for consumers to qualify for loans, according to a report from the National Association of Home Builders released this week.
The National Association of Home Builders meaures builder confidence on a scale of 0 to 100. A score below 50 indicates that more builders viewed sales as poor than good.
For March, builder confidence in the market for single-family homes fell three points to 36 after a revised 39 reading in February. The results fell below analystsâ expectations, which hovered around 38.
The survey, which has been conducted for 20 years, gauges builder confidence in three areas: new single-family home sales, sales expectations for the next six months and consumer traffic expectations.
All three indices fell in March. Sales expectations for the next six months declined three points to 50 while traffic expectations slipped one point to 28. Regional results revealed that builder confidence fell the most in the South, dropping four points, followed by the Northeast which saw a two point decline.
âBuilders 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,â said David Seiders, chief economist for NAHB, in a statement on Monday.
The negative news comes as investors struggle to take stock of the subprime meltdown and gauge how the crisis will seep into other areas of the housing market and economy.
Last week, Alan Greenspan, former chairman of the federal reserve, said there was no evidence of a subprime spillover yet, but he warned it will happen if housing prices deteriorate.
However, despite the surveyâs disappointing results, Seiders assured investors that the housing market could rebound because the fundamentals, such as favorable interest-rates, positive employment growth, low energy prices and increased affordability, âare relatively strong.â
âNAHB continues to forecast modest improvements in home sales during the balance of 2007, although the problems in the mortgage market increases the degree of uncertainty surrounding our baseline (i.e., most probable) forecast,â Seiders said.
See This Story At: http://www.forbes.com/markets/2007/03/21/builder-confidence-drops-markets-equity-cx_er_0319markets41.html
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