By Ian McKendry

WASHINGTON (MNI) – Builders outlook for construction of new homes
remained dim in September according the National Association of Home
Builders’ Housing Market Index released Monday.

The index came in at a reading of 14 in September compared with 15
in August. The index is derived from conducting a survey of home
builders’ perceptions of the market. A reading over 50 indicates more
builders view conditions as good rather than bad, while anything less
than 50 means more builders think conditions for home building are poor.

The index has been hovering between 13 and 16 for the past six
months.

“The fact that the HMI continues to hover within such a narrow, low
range reflects builders’ awareness that many consumers are simply
unwilling or unable to move forward with a home purchase in today’s
uncertain economic climate,” NAHB Chief Economist David Crowe said in a
statement Monday.

“Very little has changed in terms of housing market conditions so
far this year,” added NAHB Chairman Bob Nielsen.

“Builders continue to confront the same challenges in accessing
construction credit, obtaining accurate appraisal values for new homes,
and competing against foreclosed properties that they have seen for some
time,” Nielsen said.

According to RealtyTrac, an online market place for foreclosures,
default notices sent to borrowers increased 33% in August compared to
July, which was the biggest month-over-month increase since August 2007.

While the uptick in foreclosures is bad news for the new home
construction business in the short term, it may be a sign that the
delays in foreclosure actions that have plagued the housing market are
starting to work themselves out, as lenders are pushing through
foreclosure actions that were previously stalled because of servicing
and documentation problems.

The Mortgage Bankers Association estimates that the delinquency
rate for one-to-four unit residential properties is 8.11% of all loans
outstanding, not-seasonally adjusted.

This week will likely provide more, albeit grim news for the
housing market. On Tuesday, the U.S. Census Bureau will release the New
Residential Construction report for Augus,t which will provide
information on how many building permits for privately owned homes were
filed and the number of new home constructions that were started.

On Wednesday, the National Association of Realtors will release
their report on existing home sales, which remained below the hoped-for
5.0 million SAAR level, falling to 4.67 million in July.

The Federal Housing Finance Agency will release their home price
index on Thursday.

** Market News International Washington Bureau: 202-371-2121 **

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