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. . . . .