Post-Tax Credit Slump: Homebuilder Confidence Sinks

National Association of Home BuildersA key index that measures the housing market confidence among home builders fell five points to 17 in June, as a slump in demand following the expiration of tax credits and financing concerns took their toll.
That was the result of the primary index of the National Association of Home Builders that gauges current sales conditions. A second one that measures sales expectations for the next six months also declined – by four points to 23 in June.
The declines snapped a string to two straight monthly gains. But those increases were heavily tilted by the homebuyer tax credits that spurred sales activity in March and April – siphoning sales from coming summer months. The tax credits expired April 30.
The ensuing slump, however, “may have been more dramatic than some builders had anticipated, which resulted in their lower confidence levels,” said NAHB Chief Economist David Crowe.
Builder confidence in the market for newly built, single-family homes fell back to February levels, before the surge in activity from the tax credits began.
“Builders still remain very cautious and are aware that several factors could impede the nascent housing recovery, including serious problems in obtaining financing for the production of housing, faulty appraisal practices and competition from short sales and foreclosed properties,” Crowe said.

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