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Builder Confidence Loses More Territory in July
Builder confidence in the market for newly built single-family homes fell for a third consecutive month this July, according to the NAHB/Wells Fargo Housing Market Index (HMI), which was released on July 16.
The index hit a record low of 16, down from 18 in June, with each of its three component indexes also sinking to new lows.
“The worsening housing slump and the near-meltdown in financial markets last week makes it even more urgent for Congress to complete action on the housing bill now, a move that will help stabilize and restore confidence in housing and the U.S. economy,” said NAHB President Sandy Dunn.
The housing stimulus bill now being considered in Congress would provide a temporary tax credit for first-time home buyers, helping to stimulate sales, reduce the inventory of unsold homes on the market, stabilize house prices and arrest the rapid deterioration of mortgage credit quality.
“Builders are reporting that traffic of prospective buyers has fallen off substantially in recent months,” said NAHB Chief Economist David Seiders. “Given the systematic deterioration of job markets, rising energy costs and sinking home values aggravated by the rising tide of foreclosures, many prospective buyers have simply returned to the sidelines until conditions improve,” he said.
“A tax credit, made available for a limited time, could be just the incentive needed to draw reluctant buyers back into the game,” Seiders said, “and a policy-induced pickup in home sales could gain momentum further down the line.”
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 home 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.
The HMI index gauging current sales conditions declined one point to 16 this month, the index for sales expectations fell four points to 23, and the index for prospective home buyer traffic receded four points to 12.
Builder confidence in July dropped six points to 10 in the Midwest, the lowest point recorded there since the HMI began being reported on a regional basis. Confidence in the West slipped three points to match the record low set this January, and the South posted a one-point drop to a reading of 13.
The Northeast was the only region to post a gain on this month’s HMI, rising two points to 14 from the previous month’s record low of 12.
 Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2008 to 2009 Metro Forecast (free preview).
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To learn more, visit www.HousingEconomics.com.
 Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
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.
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