The National Association of Home Builders (NAHB) sentiment index is at 17 this month. While MarketWatch reports that this means the sector is lacking forward momentum, at least some of the blame is being placed on the shoulders of appraisers.
“In a special question this month, a third of the builders said they had lost sales because of low appraisals. They said appraisers are using foreclosures and distressed sales for comparisons.” According to NAHB, the response is a 25 percent increase for this response compared to the July survey. The article also states that home builders are concerned because of new rules that require an independent appraisal of the new home.
An explanation of the index (from NAHB): “Derived from a monthly survey that NAHB has been conducting for nearly 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.” More information is available at http://www.nahb.org/hmi and http://www.housingeconomics.com/.