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Builder confidence is stagnant, distressed homes remain major competition

Builder confidence is stagnant

The National Association of Home Builders (NAHB) is reporting today that builder confidence in the market for newly built, single-family homes remains unchanged for the month of August and is still at a stagnant, low level compared to previous years.

Why builders are losing contracts

This month, the NAHB poll included a “special questions” section wherein additional questions were asked of builders, one of which was about why they felt they were losing sales contracts, and 41 percent responded that buyers’ inability to sell their current homes was the top reason.

Expectations on future decline

Builder confidence in sales conditions and current buyer traffic ticked up slightly, but after July’s increase in confidence in future sales, builders’ expectations for the next six months has declined.

Distressed homes are major competition

“Builders continue to confront the same major challenges they have seen over the past year, including competition from the large inventory of distressed homes on the market, inaccurate appraisal values, and issues with their buyers not being able to sell an existing home or qualify for favorable mortgage rates because of overly tight underwriting requirements,” said Bob Nielsen, chairman of the NAHB and a home builder from Reno, Nev.

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Uncertainty in the market and in jobs

“The uncertain economic climate and concerns about job security are discouraging many potential buyers from exploring a home purchase at this time,” said NAHB Chief Economist David Crowe. “While buying conditions are very favorable in terms of prices, interest rates and selection, consumers are worried about what the future will bring, and builders are echoing those sentiments.”

Regional inconsistencies in builder confidence

Regionally, builder confidence was inconsistent with a relative gain in the Northeast, a small gain in the West, no change in the South and a small decline in the Midwest.

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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