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Builder confidence levels stagnant, consumers fear inability to resale

Six months of similar confidence levels

According to the National Association of Home Builders, builder confidence in single family home construction is at the same level it has been for the past six out of seven months.

“Builder confidence has hardly budged over the past six months as persistent concerns regarding competition from distressed property sales, lack of production credit, inaccurate appraisals, and proposals to reduce government support of housing have continued to cloud the outlook,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. “In addition, many builders in this month’s survey cited high gas prices as a further contributor to consumer anxiety and reluctance to go forward with a home purchase.”

“The HMI component index measuring traffic of prospective buyers increased by one point for the second time this year as prospective buyers show growing interest but remain extremely hesitant due to a number of factors,” said NAHB Chief Economist David Crowe. “Asked to identify reasons that potential customers are holding back at this time, 90 percent of builders surveyed said clients are concerned about being able to sell their existing home at a favorable price, while 73 percent said consumers think it will be difficult for them to get financing. Clearly, access to credit for both builders and buyers remains a considerable obstacle to the revival of the new-homes market.”

Confidence levels inconsistent regionally

While the Midwest followed the national trend of remaining unchanged, confidence in the South bumped up a point and jumped two points in the West. Previously, the Northeast region had escalated faster than other regions but has now seen a five point drop.

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With mixed news hitting the market and shaky economic foundation, builders will likely continue attempt optimism but reveal a steady realistic attitude, knowing that their business relies not just on perception but on their own ability to secure funding and move product. We maintain that the new home sector will not see a recovery in 2011.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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