For the third month in a row homebuilders indicated to the NAHB/Well Fargo Housing Market Index survey that they were losing confidence in the housing market. As you can see on the chart below, after peaking in December and January at 47—still a recessionary number—homebuilder confidence as measured by the index has fallen in February, March and April.
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While homebuilders are seeing demand for their homes, banks are—perhaps rightly so—worried about lending into the housing market today. NAHB Chairman Rick Judson said “Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values.”
While there are changes happening in the housing market with possible upside, caution remains necessary.[/expand]