Builder confidence in the market for newly built, single-family homes fell by three points in June, coming in at a reading of 13 in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index [HMI], released today.
It was the lowest figure recorded since September 2010.
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"Builders are being squeezed by the continuing weakness in existing-home prices against which they must compete -- as well as rising material costs," said NAHB chairman Bob Nielsen, a home builder from Reno, Nev.
Nielson also pointed to poor appraisal values and consumer confidence as factors that have made selling a newly constructed home at a price that covers the costs extremely challenging.
"Potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements, and general uncertainty about the economy. Economic growth must pick up in order for housing to gain the momentum it needs to get back on track, said NAHB chief economist David Crowe.
Every component of the HMI fell in June. Current sales conditions and traffic of prospective buyers each fell two points, to 13 and 12, respectively, while sales expectations in the next six months fell four points to tie its record low score of 15 set in February and March of 2009.
The Northeast was the only region to increase its June HMI, gaining two points to 17. The Midwest dropped three points to 11, the South dropped two points to 14 and the West recorded a four-point decline to 12.