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Home Builders Confidence Slumps

Washington — Increasingly concerned about rising mortgage rates, softer demand and ongoing affordability issues, the nation's single-family home builders are growing more cautious about the prospects for the new home market.

The monthly builder confidence index compiled by the National Association of Home Builders and Wells Fargo Bank declined four points in April to a reading of 50, from a downwardly revised reading for March.

All three component indices declined during the month: sales, sales expectations, and traffic from prospective buyers.

Regionally, only builders in the West — where new home sales surged in April — said they were more bullish than they had been the month before, with their confidence level rising four points to a reading of 70. But confidence levels declined seven points in the Northeast, to 49; by four points in the Southeast, to 55; and by five points in the Midwest, to 32.

“Homebuilders definitely view this as something of a transition period, where demand from speculators is easing off and the market is heading to a more sustainable level of activity following the record-breaking performance of 2005,” said David Pressly, president of the home builders' group.

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