Posted: Jul 19, 2010 10:46 AM by Bea Karnes, News First 5
Updated: Jul 19, 2010 10:46 AM
Homebuilders' confidence in the housing market has sunk to the lowest level in more than a year, fresh evidence that the economic recovery is slowing.
The National Association of Home Builders said Monday its seasonally adjusted housing market index fell to 14 in July. It was the lowest level since March 2009. June's index level was revised downward to 16.
Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.
Builders are reporting a sharp drop in the number of buyers looking for new homes now that federal tax credits of up to $8,000 have expired.
But Mike Larson, real estate and interest rate analyst at Weiss Research, said what's really weighing on the housing industry is a dismal labor market that has slowed the broader recovery.
"With growth slumping again, and unemployment hovering near the double digits, we simply don't have the necessary ingredients for a sustainable recovery in housing," Larson said.
New home sales in May dropped 33 percent to the slowest pace in the 47 years records have been kept. The number of buyers who signed contracts to purchase previously occupied homes tumbled 30 percent in May. The drop-off came immediately after the tax incentives to sign a contract on a home ended on April 30.