Builder Confidence Drops
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) reported this week that builder confidence had slipped this month. With a current reading of 30, the HMI has now returned to the lowest level in its current cycle, which was previously hit in September of 2006. The tightening of lender standards and cancellations are two major factors in the drop.
“The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated,� added NAHB Chief Economist David Seiders. “We’re now projecting that home sales and housing production will not begin improving until late this year, and we’re expecting the early stages of the subsequent recovery to be quite sluggish. There still are tremendous uncertainties regarding our baseline forecast going forward, owing largely to the subprime crisis that is having widespread effects throughout the mortgage market.�