U.S. Homebuilder Confidence Stagnates in February on Slow Sales
U.S. Homebuilder Confidence Stagnates in February
Jim R. Bounds/Bloomberg
Brian Womble, a cement mason, works on the foundation of a new home under construction in Cary, North Carolina.
Brian Womble, a cement mason, works on the foundation of a new home under construction in Cary, North Carolina. Photographer: Jim R. Bounds/Bloomberg
Feb. 14 (Bloomberg) -- Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., discusses the outlook for a recovery in U.S. homebuilding. Hovnanian talks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)
Confidence among U.S. homebuilders stagnated in February, reflecting a still-depressed housing market.
The National Association of Home Builders/Wells Fargo sentiment index registered a reading of 16 for the fourth consecutive month, in line with the median forecast of economists surveyed by Bloomberg News, data from the Washington- based group showed today. Readings below 50 mean more respondents said conditions were poor.
Builders must compete with a glut of unsold properties depressing home prices as the number of foreclosure filings rises and unemployment holds above 9 percent, damping demand for new construction.
“While builders are starting to see more interest among potential home buyers, we are also dealing with a multitude of challenges, including competition from foreclosure properties and inaccurate appraisals of new homes, which are limiting our ability to sell,” said NAHB Chairman Bob Nielsen, a homebuilder from Reno, Nevada, in an e-mailed statement “On top of that, an extremely tight lending environment continues to make it almost impossible to obtain credit for viable new and existing projects.”
Economists forecast the builder index in February would hold at 16, according to the median of 47 projections. Estimates ranged from 15 to 18.
The measure, which was first published in January 1985, reached a record low of 8 in January 2009, and averaged 54 in the five years before the recession began in December 2007.
Single Family
The builders group’s index of current single-family home sales rose to 17 from 15, the report showed. A measure of sales expectations for the next six months rose to 25 from 24. The gauge of buyer traffic held at 12.
The confidence survey asks builders to characterize current sales as “good,” “fair” or “poor” and to gauge prospective buyers’ traffic. It also asks participants to gauge the outlook for the next six months.
Builders in two of the four regions saw a drop in confidence this month. The gauge fell to 12 from 13 in the Midwest and decreased to 13 from 15 in the West. The index increased to 22 from 20 in the Northeast and increased to 18 from 17 in the South.
A Commerce Department report due tomorrow may show builders began work on more houses last month, according to the median estimate in a Bloomberg News survey.
Builders remain on the sidelines while foreclosures are still a threat. There were 190,000 new houses on the market at the end of December, the fewest since January 1968, the Commerce Department said Jan. 26.
With high unemployment and banks seizures poised to resume after a slowdown, foreclosure filings will climb about 20 percent in 2011, reaching a peak for the housing crisis, RealtyTrac Inc. said last month.
Home Values
Home values in the U.S. fell during the fourth quarter because potential buyers anticipated prices would decline further. The median price of a single-family home dropped from a year earlier in 71 of 152 metropolitan areas tracked by the National Association of Realtors, the group said last week.
“Affordability is the least of the problems right now,” Ara Hovnanian, chief executive officer of New Jersey’s largest homebuilder, said yesterday on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “The issue is unemployment, fear and lack of confidence, and that’s what’s got to turn right now.”
Hovnanian Enterprises Inc. on Dec. 22 reported a fourth- quarter loss bigger than analysts expected as revenue fell 19 percent. The company has cut about 75 percent of its workforce in the past four years, Hovnanian said during the interview. He said he expects the industry “to start building some momentum” in the second quarter.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net.
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