WASHINGTON — The Multifamily Condo Market Index ended 2007 on a low note, with the component of the index tracking builder confidence in current conditions standing at 18.8, down nearly 11 points from the same time a year ago, according to the National Association of Home Builders, a trade association representing more than 235,000 members.
“Given that the condo market became so overheated during the peak of the housing boom, it is not surprising that the market now continues to struggle, considering the difficulties in the mortgage sector and the fears about the economy in general,” said David Seiders, NAHB’s chief economist. “It is going to take time for the extra inventory to be absorbed.”
Builder expectations for the next six months are only slightly more optimistic: The component tracking expectations stood at 29.2 in the fourth quarter of 2007. In the fourth quarter of 2006, this component of the index stood at 49.1.
Responding to a series of special questions that accompanied the MCMI survey for the fourth quarter, 28% of survey respondents reported higher or somewhat higher sale cancellation rates in the fourth quarter of 2007 compared to a year earlier. The average sales cancellation rate in the fourth quarter of 2007 was 19%; the median was 12%.
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