HOMEBUILDERS REBOUNDING, BUT COULD USE A LITTLE HELP FROM THE BANKS

Builder confidence hits its highest level in more than six years, says the National Association of Homebuilders. But the things could be even better than the are:

“Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market,” observed NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “However, one thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today’s overly stringent lending standards.” [Emph. added]

“Overly stringent lending standards” is something of an understatement. Semi-related data point, for perspective: since September 2008, when Lehman Brothers failed, bank deposits have risen by 29%. Over that same period, bank loans have jumped by . . . 2%. On reason for the paltry increase is of course that demand for credit is light as companies hoard cash. But another reason is surely that the credit-underwriting pendulum has swung too far toward caution (likely at the behest of regulators). Not good. It’s a serious impediment to economic growth. . . . .