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April 18, 2014

Lack of Lots Worries Homebuilders

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Lack of Lots Worries Homebuilders

For the third consecutive month, homebuilder confidence in the new-home market has shown signs of waning, according to this month’s National Association of Home Builders/Wells Fargo Housing Market Index. 

Since January, homebuilder sentiment began to decline after eight consecutive months of rising.

"Although many of our members are reporting increased demand for new homes in their markets, their enthusiasm is being tempered by frustrating bottlenecks in the supply chain for developed lots along with rising costs for building materials and labor," says Rick Judson, NAHB chairman. "At the same time, problems with appraisals and credit availability remain considerable obstacles to completing deals."

A measure of 50 on the index marks the midpoint between positive and negative sentiment about the new-home market. The index currently stands at 44—in negative territory. 

Regionally, builders are gaining the most confidence in the West, where new demand is being spurred by low inventories of homes for sale. Meanwhile, builder confidence fell in March in the South and Midwest, and remained unchanged in the Northeast. 

Source: “US Home Builder Confidence Declines for Third Month,” CNBC (March 18, 2013)

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