Although most projections show that the housing market should start to make a very slow recovery this year, homebuilders are not joining in the atmosphere of cautious optimism. In fact, they are downright discouraged and don’t expect much to change for them any time soon, reported the National Association of Home Builders (NAHB) yesterday[1]. The air of general concern in this sector is largely due to some serious challenges that stem from new home construction. Because of the huge glut of homes – many relatively new and even unlived-in – on the market today in the form of preforeclosure deals, foreclosure homes and REO (real estate owned) properties, it is difficult for homebuilders to find buyers for their new homes. The cost of building a new home cannot begin to compete with the deep discounts on existing homes, and there is little to distinguish new construction, in many cases, from existing developments.

In addition, even when homebuilders can provide a new, unique product that attracts buyer attention, buyers simply are not inclined to move and buy right now, reports the NAHB. “At this point…consumers and builders [are waiting] for clear and consistent indications that jobs and economic output are reviving,” said NAHB’s chief economist David Crowe. And lenders are slow to move as well, making it difficult to get financing on projects even if the builder thinks the concept is a viable one. Since the construction industry often powers economic recoveries, it may be difficult to launch a full-scale recovery without new-home construction reviving. What types of new construction would you be interested in investing in?

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[1]http://www.google.com/hostednews/canadianpress/article/ALeqM5hf4qzN9jP0HlEI3kpfdYDhybKSEw?docId=5684229