Builder Confidence Loses More Ground in July
A surplus of unsold homes on the market — along with ongoing concerns over subprime mortgage performance, more restrictive lending standards and higher interest rates — have taken a toll on builder confidence this month, with the NAHB/Wells Fargo Housing Market Index (HMI) dropping four points to a reading of 24, its lowest level since January 1991.
"The bottom line is that the single-family housing market is still in a correction process following the historic and unsustainable highs of the 2003 to 2005 period," said NAHB Chief Economist David Seiders. "Builders are actively trimming prices and offering buyer incentives to work down their inventories, but meanwhile there is a large supply of vacant existing homes on the market, and affordability problems persist despite efforts to attract buyers.”
Despite these challenges, Seiders added that “we expect to see home sales get back on an upward path late this year and we expect housing starts to begin a gradual recovery process by early next year. At that point, this market will be operating well below its long-term potential, providing plenty of room to grow in 2008 and beyond."
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 the traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
All three component indexes declined in July. Current single-family sales and sales expectations each fell five points to 24 and 34, respectively, while prospective buyer traffic declined three points to 19.
Likewise, all four regions of the country posted declines in the July HMI. The Northeast and South each experienced five-point declines, to 31 and 26, respectively, while the Midwest slipped a single point to 19 and the West declined three points to 25.
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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.