Survey: Builders Fear Loss of Sales From New FHA Guidelines

Changes in down payments, seller contributions cited

By Pat Curry, HousingZone Contributing Editor

February 18, 2010

While reporting an increase in pricing, traffic and sales in January, nearly 300 building executives surveyed said they expect new FHA guidelines to have a “meaningful impact” on sales. Nearly 90 percent of the builders participating in John Burns Real Estate Consulting’s February survey said they expect to lose sales because of the new guidelines, and 50 percent expect to lose 10 percent or more of sales. Reduced seller-paid closing costs and increased down payments for buyers with low FICO scores are expected to have the biggest impact.

Other highlights of the survey include:

Builders in Southern California, Texas and the Northeast reported increased prices on new homes, either from increases to base pricing or reduced incentives.
Starts increased in seven out of 10 regions, especially in northern Florida and northern California
New projects are outselling existing communities, due to better locations and lower prices.
Nearly all builders surveyed were starting some spec inventory; inventory is expected to increase through May.