Monday, May 16, 2011

US builders see little to like in housing market

With all the homes in the shadow inventory, I don't see home building increasing in the next few years.  Plus, household size is increasing reducing the demand for housing.
Builders' outlook for the industry in May was unchanged at 16, the National Association of Home Builders said Monday. It has been at that level for six of the past seven months.
Any reading below 50 indicates negative sentiment about the market. The index hasn't been above that level since April 2006.
When asked about where they see sales of single-family home heading over the next six months, the builders offered their most pessimistic outlook since September.
Last year the number of people who purchased previously owned homes fell to a 13-year low. Sales of new homes were even worse, hitting the lowest level on records dating back nearly a half-century.
Builders are struggling to compete because foreclosures are forcing down prices for previously occupied homes. The median price of a new home was about 34 percent higher in March than the median price for a re-sale. That's more than twice the markup in healthy housing markets.
 Also, current homeowners don't have a lot of equity for a trade up.
About 90 percent of the builders surveyed said potential buyers are also holding back on purchases because they are concerned they won't be able to sell their current home at a favorable price.
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1 comment:

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