HomeBuilders Confidence at a Historic Low & Foreclosures News

According to a real estate group, home builders confidence fell to a 16 year low in the new home market. The survey used to report the findings stated that borrowers problems finding loans and financing was spreading beyond just the subprime sector. This is the lowest recorded level of confidence since January of 1991, when the nation was going through a recession, the start of the 1^st Gulf War, and an energy price shock. Any reading below 50 means that home builders believe that the market conditions are poor rather than good. The survey’s different components-expectations for the market for the next 6 months, view of current conditions-are all at a 16 year low. All regions of the country reported low confidence results. A chief economist for the National Association of Realtors states that he doesn’t believe there will be any change in the rate of purchases of new homes or the building of new homes until 2008 at the very earliest. He also states that problems in the subprime market have spilled over to other parts of the real estate finances, which is helping to delay a revival of the market. It appears as though the market will slowly recover in 2008, and will continue to grow through 2009 and beyond. Not only are mortgage problems preventing buyers from getting loans and funding to build new homes, they are causing others to delay the decision to buy a new home. Home builders are trying to revive their end of the market by offering non-price incentives, and lowering prices, hoping to raise sales and prevent cancellations; however they are still dealing with a difficult market. New homes are only a small fraction of the housing market, but they have a large impact on the supply and prices of existing homes on the market. The nations six biggest home builders have all reported losses in their second quarter, and are predicting losses into next year. This survey follows that of a report that stated that they price of a typical home in the country has fallen again-the 4^th straight quarter in which it has dropped.

Foreclosures filings across the country have been less this past quarter than expected, however they are still at an all time high. The federal government has decided for the time being not to regulate interest rates, but this might change if the foreclosures situation continues to get worse. With foreclosures in many states reaching historic highs, the federal government might decide to come in at the last minute and help struggling homeowners, as this has fallen mainly to the state governments and lending agencies.