Subprime Mortgage Concerns Undermine Builder Confidence
Builder confidence slipped further this month over ongoing concerns about the subprime mortgage market, pushing the NAHB/Wells Fargo Housing Market Index (HMI) down three points to a reading of 30.
The index appeared to be hitting the bottom of the current down cycle in September, when it also dipped to 30, and it improved slowly but steadily through February before relapsing as the negative implications of subprime loan problems became evident.
"Builders are feeling the impacts of tighter lending standards on current home sales as well as cancellations, and they are bracing for continued challenges ahead," said NAHB President Brian Catalde.
"The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated," added NAHB Chief Economist David Seiders.
"We're now projecting that home sales and housing production will not begin improving until late this year, and we're expecting the early stages of the subsequent recovery to be quite sluggish," he said. “There still are tremendous uncertainties regarding our baseline forecast going forward, owing largely to the subprime crisis that is having widespread effects throughout the mortgage market."
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and traffic of prospective buyers. Any number over 50 indicates that more builders view sales conditions as good than poor.
All three component indexes declined in May. The index gauging current single-family sales slipped two points to 31, sales expectations for the next six months fell three points to 41 and prospective buyer traffic skidded four points to 23.
Three out of four regions posted declines in the May HMI. The Northeast posted a six-point decline to 32, the South was down four points to 33 and the West fell three points to 32. The Midwest eked out a single point gain, to a lowly reading of 23.
Construction Forecast Conference Now Available on the Internet
The simultaneous Webcast of the Construction Forecast Conference — Spring 2007 held in Washington, D.C. on April 26 is available for purchase for the next three months.
Those interested can purchase the conference Webcast, which includes panels of nationally recognized experts discussing economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.
Purchasers will receive unlimited access to the Webcast archive for three months, as well as electronic copies of the conference handouts and presentation material. Purchasers can watch at their own pace, rewind, fast forward and review important sections.
To Purchase the Webcast
To purchase the Webcast, visit www.nahb.org/cfcwebcast.
Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2007-2008 Metro Forecast (free preview). Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
To learn more, visit www.HousingEconomics.com.
NAHB Kit Gives Builders Back-to-Basics Tips in Cooling Market
With the current cooling of the nation’s housing market expected to persist into next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.