“We are experiencing the same as others who have reported, decent spring followed by a poor summer,” said Stephen Paul of Mid-Atlantic Builders. “Through June, sales were up 16 percent then dropped off the table in July and August.”

Home builder confidence stalled nationally in September, after rising steadily, especially at the beginning of 2013.

“While builder confidence is holding at the highest level in nearly eight years, many are reporting some hesitancy on the part of buyers due to the sharp increase in interest rates,” said Rick Judson, the National Association of Home Builders’ chairman.

If interest rates retreat to where they were at the beginning of the year, mortgage refinances will likely rebound again, especially since they have dropped so dramatically in the past six months.

As for home sales, that is not an easy call. Sales have been hampered not just by rising mortgage rates, but by very low inventory, anemic construction, and still-pervasive negative equity among potential move-up buyers. Lackluster job and wage growth, especially among younger Americans, has not helped either.

(Read more: Tepper: Fed wants growth first, second, and third)

We also know that while the Federal Reserve may not be tapering now, it will have to eventually. Some say it should do so sooner rather than later.

“Rip this Band-Aid off already,” said Peter Boockvar of the Lindsey Group. “There will never be the right time to cut back, and today was the perfect opportunity to do so because the market was ready for it. Playing games now over this with the market will not smooth the eventual ease.”

Article source: http://www.cnbc.com/id/101043610

(Read More: The Million-Dollar Home Challenge)

Mid-Atlantic, a small Maryland builder with six communities, now has 10 percent of its backlog in spec homes, and they are not alone. The big public builders are heading back to spec as well.

“I think the biggest competitive advantage builders have right now is that they have product, and with existing inventory so low they need to take advantage of the fact that they actually have something to sell,” explained Megan McGrath, a home building analyst at MKM Partners. “When you’re starting to think about the first-time buyer coming back into the market, you may want to increase your spec inventory a little.”

(Read More: Housing “Stuck” Due to Short Supply)

Supplies of homes for sale are down across the nation. Inventory in March fell 17 percent from a year ago, according to the National Association of Realtors. Listings usually rise dramatically in the spring, but they have not kept pace with historical averages.

In its earnings release Monday Meritage Homes CEO Stephen J. Hilton noted, “Housing demand is greater than the supply of homes available for sale in many of the areas where we operate, causing home prices to increase.”

Article source: http://www.cnbc.com/id/100669083

(Read More: The Million-Dollar Home Challenge)

Mid-Atlantic, a small Maryland builder with six communities, now has 10 percent of its backlog in spec homes, and they are not alone. The big public builders are heading back to spec as well.

“I think the biggest competitive advantage builders have right now is that they have product, and with existing inventory so low they need to take advantage of the fact that they actually have something to sell,” explained Megan McGrath, a home building analyst at MKM Partners. “When you’re starting to think about the first-time buyer coming back into the market, you may want to increase your spec inventory a little.”

(Read More: Housing “Stuck” Due to Short Supply)

Supplies of homes for sale are down across the nation. Inventory in March fell 17 percent from a year ago, according to the National Association of Realtors. Listings usually rise dramatically in the spring, but they have not kept pace with historical averages.

In its earnings release Monday Meritage Homes CEO Stephen J. Hilton noted, “Housing demand is greater than the supply of homes available for sale in many of the areas where we operate, causing home prices to increase.”

Article source: http://www.cnbc.com/id/100669083

Builders are on track to construct the fewest single family homes in history this year. Total housing starts in July were down 1.7 percent, month to month, which may not sound like a lot, but when you break the number down, you see the problem.

Single family starts were down 4.9 percent, while Multi-family starts rose 6.3 percent. Rental demand continues to rise, as consumer confidence in homeownership was decimated yet again by the recent debt turmoil in the economy.

I am reporting these numbers today from a construction site. Mid-Atlantic Builders of Rockville, MD is putting up the last phase of a large single family development out in Bowie, MD, which is about 15 minutes outside the DC Beltway. They are a mid-sized builder, about 40 to 50 homes a year, which is about a third of the business they did just five years ago.

They are now smaller, leaner, but surviving thanks to their location near DC, where unemployment is low, relative to the rest of the country. Business was even starting to pick up last winter, according to executive VP Stephen Paul.

“We started what we call the spring market in February. We started out very strong, we had a good February, March, even into April. What started to cause consumer confidence to wane was the escalation of gas prices, the debt issue with the government, and what’s going on in Europe.”

In other words: Confidence.

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