US home builder outlook worsens in September
WASHINGTON – The U.S. homebuilders' outlook worsened in September, as foreclosures and anxious buyers hurt construction and sales activity.
The National Association of Home Builders said Monday that its index of builder sentiment in September fell to 14 from 15. The index has been below 20 for all but one month during the past two years.
Any reading below 50 indicates negative sentiment about the housing market. It hasn't reached 50 since April 2006, the peak of the housing boom.
Last year, the number of people who bought new homes fell to its lowest level dating back nearly a half-century. Sales this year haven't fared much better.
Builders are struggling to compete with foreclosures, which have made the price of re-sale homes more competitive. Many buyers are having difficulty obtaining loans or meeting higher down payment requirements. Low appraisals are scuttling some deals after contracts have been signed and some would-buyers who want to purchase a new home can't sell their old one.
David Crowe, the group's chief economist, said a weakening U.S. economy and high unemployment has made the short-term prospects for the homebuilding industry "fairly bleak." The low indexes reflect "builders' awareness that many consumers are simply unwilling or unable to move forward with a home purchase in today's uncertain economic climate."
While new homes make up a small portion of sales, they have an outsize impact on the economy. The builders' trade group says each new home built creates an average of three jobs for a year and generates about $90,000 in taxes.
Separate gauges of current single-family home sales and foot traffic of prospective buyers each fell two points, to 17 and 11, respectively.
An index of builders' outlook in the Midwest rose one point to 11. In the Northeast and South, the index fell two points to 15 and in the West it fell three points to 12.