Despite a healthy dose of incentives designed to boost the flagging housing market, home builder sentiment remains under pressure amid worried buyers and the numerous opportunities that remain to purchase a late-model home in foreclosure.
The NAHB/Wells Fargo Housing Market Index fell from 17 in February to 15 in March, indicating that home builders still face an uphill climb. A level of 50 suggests builders are neither optimistic nor pessimistic.
Moreover, the components that make up the index were all in retreat this month, including prospective traffic.
The new home market makes up less than 10% of total housing sales, and existing home sales normally provide a more in-depth look at the housing market.
Still, the extension of the first-time home buyers tax credit and the new credit for existing buyers, coupled with near record low interest rates, should be sparking more interest in new home sales.
The best incentive builders could use would be a much firmer job market. further stabilization in home prices and a solid increase in consumer confidence.
Until we see a healthy dose of all three ingredients, many potential buyers of new homes may remain on the sidelines or stay focused on bargains offered by abandoned homes still sitting in bank portfolios.
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