Homebuilder Sentiment Down...But an Optimistic Future

Sales prospects for homebuilders throughout the US have experienced some lows this year. First it was the foreclosures; now it's the harsh weather in addition to the unfortunate rise in foreclosures. The number of households facing foreclosure last month grew 6 percent from a year ago, according to RealtyTrac Inc.

The National Association of Home Builders (NAHB) reported just a few days ago that its housing market index, which tracks industry confidence, slipped this month by two points to 15, back to its January level. To give you an idea about what those numbers mean, readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.

Sales of newly built homes dropped 11 percent (a record low for the month of January), and the third consecutive monthly decline. Sales of previously occupied homes dropped 7 percent (the sharpest decline since June).

The optimistic side of this story is that industry insiders are hoping and predicting that the spring will bring a positive turn around to this grim outlook. Several of the home building industry's largest companies, including Hovnanian Enterprises Inc. and Ryland Group Inc., have been buying land and increasing construction. NAHB Chief Economist David Crowe reported that "we do expect a 25 percent improvement in new-home construction in 2010 over 2009 to rebuild inventory and meet expected pent-up demand."

Optimism is the key and the new home purchases will help the entire industry and related industries. New homeownership means work for designers, plumbers, electricians, landscapers and others. If you are a new homebuyer, remember that you can find a contractor in any home-improvement related field right here at Networx.

Posted by: Marcy Tate

Photo Credit: Flickr.com (Great Valley Center)