Sale Expectations Fell This Month for Builders

by Houston Agent

Sales expectations for homebuilders dropped in April 2011, as reported by Bloomberg today. The National Association of Home Builders/Wells Fargo sentiment index is currently at 16, a drop of one point since March, which reflects a poor outlook for sales in residential construction.

The report from Bloomberg also highlighted a drop in the builder’s index of sales expectations over the next half-year, from 26 to 23. Single family home sales are also expected to decline from 17 to 16. In better news, the buyer traffic index rose slightly, gaining one point and rising from 12 to 13.

David Crowe, NAHB chief economist, views this sales outlook as a result of “persistent concerns about home values,” particularly when considering the rate of foreclosures nationwide. RealtyTrac places the rate of foreclosure filings at a 20 percent increase in all of 2011. Yet, this means that while confidence in construction remains low, existing home sales are expected to receive a bump in the market share due to distressed pricing.

Despite homebuilders competing with existing home prices, not all regions in the U.S. are sliding backwards in terms of sales and confidence in new homes. The Northeast and Midwest saw the confidence index rise in April 2011, from 18 to 20 and 12 to 14, respectively.

In January 2009, the index reached a record low of 9. Prior to the housing market turn in December 2007, the index had averaged 54 for five years.

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