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Homebuilder sentiment still in basement
WASHINGTON (5/16/14)--Home-builder confidence is at its lowest point in a year, as the real-estate market struggles to recover from a brutal winter.
 
The National Association of Home Builders/Wells Fargo sentiment gauge fell to 45 from a revised 46. Economists polled by MarketWatch predicted a May reading of 48.
 
The index has been below 50 since February, indicating that builders, generally, are pessimistic about sales trends.
 
Homebuilder sentiment is back where it was 12 months ago, before borrowing costs started to noticeably rise, signaling that the run-up in mortgage rates, along with healthy price appreciation, is dampening housing demand. This is confirmed by the prospective buyers' traffic index, which has measurably declined since the summer and was at 33 for May.
 
Tight credit conditions, limited lot availability, less affordability as home prices increase could be stagnating the real estate market as summer approaches, Marketwatch said (May 15). Hiring gains may contribute to a pickup in housing demand and help offset some of negative trends.


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