Weak mortgage demand drives builder confidence to 17-month low


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Despite mortgage rates near record lows, few Americans are interested in taking on debt to buy new homes - and their reticence is sending homebuilder confidence to levels not seen since early 2009.

According to the National Association of Home Builders, a trade group, builder confidence plummeted in July. The all-time low in the organization's sentiment index - 9 - was reached in January 2009, but the present-day index value of 13 isn't much higher.

"Today's report reflects single-family home builders' concerns about current and future economic conditions and about the increasing hesitancy they are seeing among potential home buyers," NAHB chief economist David Crowe said.

That sense of hesitancy was reinforced last week by the Mortgage Bankers Association, another industry group. The MBA said purchase-loan activity remains moribund, despite 30-year mortgage rates at an all-time low of 4.57 percent.

Purchase activity, the organization reported, is 34.1 percent lower than it was last August - and refinances are making up a disproportionate share of the mortgage mix. Refinance applications represented 78.1 percent of total mortgage activity last week.

By Steve Monfort ADNFCR-1724-ID-19926053-ADNFCR

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance , Real Estate

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