Housing market continues its decline
By Tom Stundza -- Purchasing, 7/18/2007 12:44:00 PM EDT
The market for new homes has fallen to its lowest point in more than 16 years as builders struggled with rising inventories of unsold houses across the country. The National Association of Home Builders/Wells Fargo housing market index, which tracks builders' perceptions of current market conditions and expectations for home sales over the next six months, fell to 24 this month, the lowest reading since January 1991.
“A surplus of unsold homes on the market, combined with ongoing concerns in the subprime mortgage arena and affordability issues associated with tightened lending standards and higher interest rates, continues to take a significant toll on builder confidence,” according to the latest NAHB press release. Other analysts point out that declining purchases of building supplies in recent Commerce Department reports on retail sales are a sign that homeowners are starting fewer pre-sale rehabilitation and do-it-yourself projects.
New homes represent about 15% of total home sales. Last week, the National Association of Realtors projected new home sales would rise slightly next year, but still remain below 2006 levels. The Realtors' trade group forecasts new home sales of 865,000 this year and 878,000 in 2008, both of which are below the nearly 1.1 million new homes sold in 2006.
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