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Home builders’ pessimism deepens

High unemployment, tough lending standards, and a glut of properties in foreclosure are weighing down housing. High unemployment, tough lending standards, and a glut of properties in foreclosure are weighing down housing. (Mel Evans/ Associated Press)
Associated Press / April 19, 2011

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WASHINGTON — Builders are more pessimistic about the housing market this month, a dismal sign at the start of the spring buying season.

The National Association of Home Builders says its index for April fell to 16. It had risen modestly in March to 17, after four straight months at 16. Any reading below 50 indicates negative sentiment about the market. The index has not been above that level since April 2006.

Last year was the worst in more than a decade for sales of previously owned homes and the worst for new-home sales in nearly a half-century.

High unemployment, tighter lending standards, and bigger requirements for down-payments are keeping many people from buying homes. A record number of foreclosures are forcing down home prices, leaving would-be buyers worried that the market has yet to bottom out.

Economists expect home prices will hit bottom this year before a modest recovery takes hold. Large swaths of the hardest-hit states, including Arizona, California, Florida, and Nevada, continue to struggle.

Builders have been hopeful that a strong spring season, traditionally the best time for home construction, could help power a turnaround.

The Northeast and Midwest saw two-point gains in their indexes of construction activity, to 20 and 14, respectively. The West held steady at 17. The South plunged from 19 to 15.

The index of current conditions fell one point, to 16, while the foot traffic of prospective buyers rose by a point, to 13. The estimate of single-family home sales over the next six months dropped three points, to 23.