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Monday, July 19, 2010

Housing Market Ills Persist

News on the housing front was a clear negative in June, according to a report today from the National Association of Home Builders.

As reported:

U.S. home builders are turning increasingly pessimistic about their business after home sales dried up when a federal subsidy expired, according to the latest survey by the National Association of Home Builders.

The NAHB/Wells Fargo housing market index fell two points to 14 in July, down from a downwardly revised 16 in June. It's the lowest since April 2009, the NAHB said Monday.

At 14, the index shows that about one in seven builders has a favorable view of the housing market. And builders' views on prospective sales were the gloomiest since March 2009.

"The pause in sales following expiration of the home buyer tax credits is turning out to be longer than anticipated due to the sluggish pace of improvement in the rest of the economy," said David Crowe, chief economist for the builders' advocacy and lobbying group.

Crowe is absolutely on target. Entrepreneurship, investment and credit are constrained mainly due to the massive uncertainties and costs inflicted on the public policy front – from government spending and debt to taxes and regulations – now and scheduled to come in the short and long run. Job creation is nonexistent. Consumer and small business confidence continue to suffer. These negatives hurt the housing market, and in turn, the long and continuing depression in housing serves as a major negative feedback further weighing down the economy.

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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