Builders still gloomy on home sales
The building industry is very slow. In many places, like Monroe, Ohio, lots are still for sale. (Jan. 10, 2011) Credit: AP
LOS ANGELES -- U.S. home builders remain discouraged over the prospects for improved home sales in the months ahead, unconvinced as yet that the economy will spur the kind of job growth needed to coax more buyers into the market.
The National Association of Home Builders said Tuesday that its monthly reading of builders' sentiment was unchanged in January at 16, where it's been since November.
While it remains the highest reading since June, any reading below 50 indicates negative sentiment about the market. The index hasn't been above that level since April 2006.
"At this point, housing remains on the sidelines of a weak economic recovery as consumers and builders wait for clear and consistent indications that jobs and economic output are reviving," said David Crowe, the trade association's chief economist.
Many smaller, private builders also continue to have a tough time getting construction loans and other financing, which could significantly slow the onset of a housing recovery, Crowe noted.
High unemployment, tighter bank lending standards and uncertainty about home prices have kept many people from buying homes, despite low mortgage rates and home prices that have fallen by more than half in some markets since the peak of the housing boom.
Builders also face competition from sharply discounted foreclosed homes.
The job market and unemployment rate need to improve before the housing can fully recover.
Many home builders remain unconvinced that a recovery is brewing this year.
Last week, Miami-based Lennar Corp. said it does not anticipate improvement in the housing market, even as it sees some signs some markets are stabilizing.
Weak sales mean fewer jobs in the construction industry, which normally helps power economic recoveries. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the builders' trade group.
The latest builder sentiment report reflects a survey of 420 residential developers nationwide.
