Homebuilders are becoming more pessimistic as higher mortgage rates and tighter subprime lending standards undermine new-home sales, according to an industry survey that shows builder confidence hit a 16-year low in June.The National Association of Home Builders/Wells Fargo Housing Market Index fell to 28 in June, down from 30 in May and 42 in June 2006. "Builders continue to report serious impacts of tighter lending standards on current sales as well as cancellations, and they continue to trim prices and offer a variety of nonprice incentives to work down sizable inventory positions," said NAHB president Brian Catalde. NAHB chief economist David Seiders noted that prime mortgage rates have moved up considerably in the past month. "Home sales most likely will erode somewhat further in the months ahead, and improvements in housing starts probably will not be recorded until early next year," Mr. Seiders said.

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