Washington, D.C.–After holding at a low but steady level for the past six months, builder confidence for newly built, single-family homes declined three points in June to a reading of 13 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), reaching its lowest point since September 2010.
NAHB Chairman Bob Nielsen says homebuilders are being squeezed by weakness in existing home prices and rising material costs. “In addition to the ongoing impacts of distressed property sales on home prices, appraisal values and consumer confidence, rising costs for materials such as roofing, copper, wallboard, vinyl siding and other components have made it extremely difficult to construct a new home and sell it at a price that covers the costs,” Nielsen says.
NAHB Chief Economist David Crowe adds that the problem is exacerbated as economic growth stalls, foreclosures continue to hit the market and the cost of building a home rises. “Meanwhile,” Crowe says, “potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements and general uncertainty about the economy.”
Every component of the HMI fell in June. The component gauging current sales conditions and the component gauging traffic of prospective buyers each fell two points, to 13 and 12, respectively. The component gauging sales expectations in the next six months fell four points to tie its record low score of 15, set in February and March of 2009.
The Northeast was the only region to post a gain in its HMI score for this June, rising two points to 17. Meanwhile, the Midwest dropped three points to 11, the South dropped two points to 14, and the West posted a four-point decline to 12.
A new NAHB-commissioned poll of 2,000 likely 2012 voters confirms the high priority that Americans continue to place on homeownership even amidst the current struggling market, as well as the voting public’s strong support for continued federal tax incentives to promote homeownership and housing choice.