It is no wonder the The National Association of Home Builders/Wells Fargo confidence index dropped to 14 this month, the lowest level since April 2009.
Even with the 30 year fixed mortgage rate at all time lows, the new home market is still Jell-O.
From Bloomberg by Bob Willis entitled: U.S. Housing Starts Drop to Lowest Level Since
October Housing starts fell in June to the lowest level since October as a slump in sales following the expiration of a government tax incentive caused U.S. builders to cut back.
Work began on 549,000 houses at an annual rate last month, fewer than the median estimate of economists surveyed by Bloomberg News and down 5 percent from May, Commerce Department figures showed today in Washington.
The retreat following the end of government support shows it will be difficult for the industry that precipitated the recession to sustain a recovery. Mounting foreclosures will swell the supply of houses on the market and pressure prices, while prospective buyers shy away as a lack of jobs shakes confidence in the world’s largest economy.
“Given the excess of existing homes for sale, there is no rush to boost starts significantly,” said Jim O’Sullivan, chief economist at MF Global Ltd. in New York, who forecast a decline in starts to 550,000. “There has been volatility in the data because of the tax credit. The best you can say is the big drag on growth from housing ended a year ago.”
The drop in housing starts followed the April 30 deadline to sign purchase agreements and become eligible to receive a government credit worth as much as $8,000.
All four regions of the country had a decrease in starts last month, led by an 11 percent slump in the Northeast and a 6.9 percent decline in the Midwest.”
I mean seriously, if you can’t sell homes at 4.57%, what is going to happen when rates hit 6%?
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