Builders remained wary of the market for new-home sales in early November, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
The HMI, based on a survey in which most builders responded before Congress enacted the expanded home-buyer tax credit, remained at 17 for the month, unchanged from a downwardly revised reading of 17 for October. Any reading below 50 indicates negative sentiment.
"Today's report confirms that home builders and buyers were in something of a holding pattern in early November as the anticipated expiration of the tax credit drew near and congressional action had not yet taken place to address this," said David Crowe, NAHB chief economist. "Meanwhile, the challenges that builders are facing in obtaining credit for new housing production and appropriate appraisal values for their homes continued to worsen. These issues still present a very worrisome problem that is weighing down prospects for a sustained housing market recovery."
The HMI component index gauging current sales conditions and the component gauging traffic of prospective buyers also remained unchanged, at 17 and 13, respectively, while the component gauging sales expectations for the next six months edged up two points, to 28.
A third of the builders surveyed also reported negative comps from faulty appraisals cost them sales in a special questions section of the HMI survey, up from 25% in a similar question asked in July. Builders report that low appraisal values are often tied to the inclusion of foreclosed and distressed properties in the appraisal process.
Builder confidence varied by region in the November survey. The South remained at 17, the Midwest fell 3 points to 14, the Northeast dropped 6 points to 19 and the West rose five points from October depressed level to finish at 19.
"Now that Congress has done its job by both extending the tax credit into next year and expanding eligibility for it among potential buyers, we are very hopeful that this will have the intended stimulative effect on sales activity going forward," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.