WASHINGTON – Homebuilders are feeling less confident in the recovery now that government incentives for buyers have expired.
Their pessimism could drag on the economy, which may not benefit so much from the job creation that construction typically generates.
Additional Photos
The National Association of Home Builders said Tuesday its housing market index fell to 17 in June, sinking five points after two straight months of increases.
Builders had been more optimistic earlier in the year when buyers could take advantage of tax credits of up to $8,000. Those incentives expired on April 30, although buyers with signed contracts have until June 30 to complete their purchases.
Experts anticipate home sales will slow in the second half of this year. In addition, high unemployment and tight mortgage lending continue to keep many buyers on the sidelines.
John Wieland, CEO of Atlanta-based John Wieland Homes and Neighborhoods, said his company has seen a decline in sales the past two months. Consumers are nervous about the economy, especially given the stock market’s recent downturn, he said.
“It doesn’t give you that warm feeling that makes you want to go out and spend a couple hundred thousand dollars,” Wieland said. “It’s just an unusually uncertain time in America.”
It’s also bad news for the economy. Each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the NAHB. The impact is felt across multiple industries, from makers of faucets to lumberyards.
In a typical economic recovery, the construction sector provides much of the fuel. But developers are trying to sell a glut of homes built during the boom years, and they are competing against foreclosed homes selling at deep discounts.
Thanks to the tax credits, sales of new homes rose nearly 15 percent in April. That followed a nearly 30 percent surge in March, the biggest monthly increase in 47 years.
But now that they are gone, “the reduction in consumer activity may have been more dramatic than some builders had anticipated,” said Bob Jones, a builder from Bloomfield Hills, Mich.
Send questions/comments to the editors.
Success. Please wait for the page to reload. If the page does not reload within 5 seconds, please refresh the page.
Enter your email and password to access comments.
Hi, to comment on stories you must . This profile is in addition to your subscription and website login.
Already have a commenting profile? .
Invalid username/password.
Please check your email to confirm and complete your registration.
Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.
Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.