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Builder Confidence Dips as Home Buying Season Begins

Builder confidence fell three points in April to 25 matching the lowest point of the year, the ""National Association of Home Builders"":http://www.nahb.com/ (NAHB) said Monday.


The month-over-month decline was the first since last September.

All three components of the index ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô current sales, sales six months out and buyer traffic ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô fell in April, with buyer traffic slipping to a four month low.

The builder assessment of present home sales conditions dropped three points to 26. The outlook for home sales in the next six months also fell three points, to 32, retreating from a near five-year high. Buyer traffic was slid to 18 from 22 in March.

The index - built based on surveys conducted jointly by the NAHB and Wells Fargo - gauges builder perceptions of current single-family home sales and sales expectations for the next six months as ""good,"" ""fair"" or ""poor.""

The survey also asks builders to rate traffic of prospective buyers as ""high to very high,"" ""average"" or ""low to very low."" Scores from each component are then used to calculate a seasonally adjusted index where any


number over 50 indicates that more builders view conditions as good than poor.

Representatives of the NAHB sought to put a positive spin on the disappointing numbers.

""Although builders in many markets are noting increased interest among potential buyers, consumers are still very hesitant to go forward with a purchase, and our members are realigning their expectations somewhat until they see more actual signed sales contracts,"" NAHB Chairman Barry Rutenberg said in a statement.

Regionally, the index improved four points to 29 in the Northeast, but tumbled eight points to 25 in the Midwest. The index slipped three points to 24 in the South and was flat at 32 in the West.

The national index remained below the ""break-even"" level of 50 for the seventy-second consecutive month.

""What we're seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September,"" said NAHB Chief Economist David Crowe.

""This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô particularly tight credit conditions for builders and buyers, competition from foreclosures and problems with obtaining accurate appraisals,"" he added.

The HMI survey followed a disappointing payroll report for March which showed the nation added 120,000 jobs, far below the 200,000-plus the market had been expecting. The same report showed a drop in the average workweek pulling down income growth, a key factor in home buying decision-making.

While the HMI has been on an upward trajectory since September, new home sales have barely budged, last reported at a seasonally adjusted annual rate of 313,000 compared with an SAAR of 302,000 in September.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.

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