Wednesday, January 19, 2011

Homebuilder sentiment index unchanged in January

And here is another article on home builders sentiment for this coming year. It does not look particularly great, but the outlook is optimistic.

By Alex Viega

LOS ANGELES — U.S. homebuilders remain discouraged over the prospects for improved home sales in the months ahead, unconvinced that the economy will spur the kind of job growth needed to coax more buyers into the market.
The National Association of Home Builders said Tuesday that its monthly reading of builders' sentiment was unchanged in January at 16, where it's been since November.

While it remains the highest reading since June, any reading below 50 indicates negative sentiment about the market. The index hasn't been above that level since April 2006.

"At this point, housing remains on the sidelines of a weak economic recovery as consumers and builders wait for clear and consistent indications that jobs and economic output are reviving," said David Crowe, the trade association's chief economist.

Many smaller, private builders also continue to have a tough time getting construction loans and other financing, which could significantly slow the onset of a housing recovery, Crowe noted.

High unemployment, tighter bank lending standards and uncertainty about home prices have kept many people from buying homes, despite low mortgage rates and home prices that have fallen by more than half in some markets since the peak of the housing boom.

Builders also face competition from sharply discounted foreclosed homes.

The job market and unemployment rate need to improve before the housing can fully recover.

The latest builder sentiment report reflects a survey of 420 residential developers nationwide.

The reading for current sales conditions was unchanged at 16, while the index for sales expectations over the next six months stayed put at 25. The index measuring foot traffic from prospective buyers rose one point to 12.

New-home sales have been hovering near historic lows since spiking briefly last spring thanks to a temporary federal tax credit for homebuyers. Between May and November, monthly sales of new homes in the U.S. declined or were flat four times. Even in the months when sales rose, the gains came off near-historic lows.

Crowe's 2011 housing forecast, which was issued last week, calls for sales in the spring to be better than last year's, even without the aid of government tax credits. He also anticipates home sales and single-family home construction to exceed last year's levels.

But the economist's outlook hinges on the U.S. jobless rate getting no worse than 9.4% and employment growth accelerating to a pace of 200,000 jobs a month by the end of 2012.

Many homebuilders remain unconvinced that a recovery is brewing this year.

Last week, Miami-based Lennar said it does not anticipate improvement in the housing market, even as it sees some signs some markets are stabilizing.

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 builders' trade group.

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