By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, Ap Real Estate Writer – Mon Sep 20, 12:08 pm ET
WASHINGTON – Homebuilders' confidence in the housing market stayed this month at the lowest level in 18 months, and more worry that the traffic of potential buyers is falling.
The National Association of Home Builders said Monday that its monthly index of builders' sentiment was unchanged in September at 13. The index has now been at the lowest level since March 2009 for two straight months.
Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.
The index is broken into three separate readings. Foot traffic from prospective buyers, an indication of future sales, fell slightly. The index measuring expectations for the next six months was unchanged. Current sales conditions were also unchanged.
"Americans by and large just aren't that excited about the prospect of buying a house," wrote Mike Larson, real estate and interest rate analyst with Weiss Research.
Sales of new and previously occupied homes fell this summer to the lowest level in more than a decade, despite the lowest mortgage rates in decades. And builders have had to cope with the worst foreclosure market since the 1930s, which is hardly close to ending.
Lenders took back more homes in August than in any month since the start of the mortgage crisis, according to foreclosure listing service RealtyTrac Inc. That's held down prices in much of the country. And it's bad news for builders, who must compete against homes that can sell for less than what it costs to build a new home.
High unemployment, slow job growth, and tight credit have kept people from buying homes. Government tax credits gave the industry a boost this spring, but since they have expired the industry has struggled.
"In general, builders haven't seen any reason for improved optimism in market conditions over the past month," said Bob Jones, a home builder from Bloomfield Hills, Mich. and the trade group's chairman. "If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential homebuyers feel more secure about the job market and economy."
Weak sales mean fewer jobs in the construction industry, which normally helps power economic recoveries. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the trade group.
On Monday, homebuilder Lennar Corp. said it returned to profitability in its fiscal third quarter as construction costs dropped and the number of completed home sales rose. But the Miami-based company new said new orders for homes fell 15 percent from the same quarter a year ago, as buyers were no longer able to claim the tax credit.