US builders’ outlook rises after sinking to 2011 low
Monday, July 18, 2011
WASHINGTON (AP) — The outlook among U.S. homebuilders became a bit rosier in June but the future prospects for home construction are anything but promising.
An index of builders’ outlook for their industry in June rose two points to 15, the National Association of Home Builders said Monday. Any reading below 50 indicates negative sentiment about the housing market. The index hasn’t reached 50 since April 2006, the peak of the housing boom.
In May, builder sentiment hit its lowest level in nine months. It’s still just seven points above the lowest reading on record, in January 2009.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales, when lenders allow borrowers to sell homes for less than what is owed on their mortgages. Lower-than-expected home appraisals are scuttling deals.
And loans are harder to come by, with requirements that borrowers put 20 percent of a home’s cost as down payment.
“Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve,” said David Crowe, the trade group’s chief economist.
Still, an index that gauges sales expectations over the next six months rose sharply, by seven points, returning to the level it reached in April. That’s despite weak foot traffic by potential buyers, which held steady between May and June.