Housing Outlook Negative

housing outlook

The housing outlook, which seemed to be on the up and up thanks to record low interest rates and a more promising homebuyer tax credit, took a step backwards in the latest home builder survey.

“The outlook for home sales has improved somewhat in recent months, due largely to implementation of the first-time home buyer tax credit and gains in housing affordability,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.

“However, looking forward, home builders are facing a few headwinds, including expiration of the tax credit at the end of November; a recent upturn in interest rates; and especially the continuing lack of credit for housing production loans.”

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) gauge of both current home sales and prospective buyers held steady, while expectations for the next six months declined.

“As expected, the housing market continues to bump along trying to find a bottom,” said NAHB Chief Economist David Crowe.

“Meanwhile, builders are taking their cue from consumers, who remain uncertain about the economy and their own situation. Builders are also finding it difficult to complete a sale because customers cannot sell their existing homes.”

The sale of an existing home is definitely throwing a wrench in the deal, as millions of homeowners are currently underwater on their mortgages, meaning they owe much more than the actual property is worth.

That could force many would-be buyers to stay put for years to come, unless they choose to default on their present mortgages.

Then there is the issue of appraisals coming in low, which is proving to make the home buying process more costly and time consuming.

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