Homebuilder Sentiment Edges Lower

Homebuilder sentiment falls for the third consecutive month to its lowest level since March of 2009, according the National Association of Home Builders.
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NEW YORK (

TheStreet

) -- Homebuilder sentiment fell for the third consecutive month to its lowest level since March of 2009, according to the National Association of Home Builders.

The NAHB said Monday its index of builder confidence in the market for newly built, single-family homes fell to a reading of 13 in August, missing expectations the index would edge higher to 15. A reading above 50 indicates positive builder sentiment, though NAHB's index has not been above that level in more than four years.

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"Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren't gaining any traction," said NAHB chairman Bob Jones, a homebuilder from Bloomfield Hills, Mich. "Meanwhile, many continue to report that problems with inaccurate appraisals, competition from the large number of distressed properties on the market, and tight consumer lending conditions are causing them to lose potential sales."

Homebuilder stocks were mixed Monday. At the close of trading shares of

NVR

(NVR) - Get Report

gained 0.7%.

D.R. Horton

(DHI) - Get Report

lost 0.8%,

PulteGroup

(PHM) - Get Report

1.5% and

Toll Brothers

(TOL) - Get Report

1.3%. The

SPDR S&P Homebuilders

(XHB) - Get Report

, an exchange-traded fund that tracks the homebuilder sector, was off by 0.3%.

NAHB's chief economist David Crowe said the report reflected mounting hesitancy among potential home buyers, as well as "the frustration that builders are feeling regarding the effects that foreclosed property sales are having on the new-homes market, with 87% of respondents reporting that their market has been negatively impacted by foreclosures."

Crowe said the second half of 2010 should be better than the first for homebuilders as the U.S. jobs market grinds slowly toward recovery. Pent-up demand and historically low mortgage rates should also help the market for new homes pick up.

Last week the Mortgage Bankers Association said mortgage applications edged up 0.6% in the prior week as record-low home loan rates failed to spark demand in the housing market. Mortgage applications for home purchases ticked up just 0.3% while those to refinance home loans rose 0.6%. Refi applications accounted for 78% of all mortgage applications in the week.

>>Mortgage Applications Tepid Despite Rates

Consumers did not take advantage of record-low 30-year fixed loan rates of 4.57% in the MBA's reporting week, down from 4.6% in the prior week and 5.38% a year earlier. The week's rate was the lowest on record since the MBA began tracking the data two decades ago. The week's average 15-year rate of 3.95% also fell to record lows, from 4.03%.

The still-struggling housing market saw sales ramp up this spring as consumers rushed to take advantage of federal tax credits that offered as much as $8,000 for first-time homebuyers and $6,500 for repeat buyers moving into new primary residences. Following the expiration of those credits on April 30, the market saw a dramatic decline in demand for the month of May that spilled over into June. Lawmakers later extended the deadline to close on a home purchase and still qualify for the tax credit to Sept. 30.

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In a separate report, the National Association of Realtors said last week the median sales price for previously occupied homes rose in 100 of the 155 metro areas it tracks in the second quarter. The national median price was $176,900, up from $174,200 in the year-earlier period and from $166,400 in the first quarter.

Even so, most industry sector analysts agree that home prices will continue to slide in the range of 5% to 10% before picking back up again, though bears will argue the drop will be closer to 25%.

-- Reported by Miriam Marcus Reimer from New York.

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