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Builder confidence in the market for newly built, single-family homes edged down in August for a third consecutive month, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), which declined one point to 13, its lowest level since March of 2009.
“Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren’t gaining any traction,” said NAHB Chairman Bob Jones. “Meanwhile, many continue to report that problems with inaccurate appraisals, competition from the large number of distressed properties on the market and tight consumer lending conditions are causing them to lose potential sales.”
“The August report reflects single-family home builders’ concerns about current and future economic conditions and about the increasing hesitancy they are seeing among potential home buyers,” added NAHB Chief Economist David Crowe.
“It also reflects the frustration that builders are feeling regarding the effects that foreclosed property sales are having on the new-homes market, with 87% of respondents reporting that their market has been negatively impacted by foreclosures,” Crowe said.
Even so, he noted, NAHB continues to project that modest job gains, historically low mortgage rates and pent-up demand will ensure a better housing market in the second half of 2010 than in the first half.
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales, sales expectations for the next six months and traffic of prospective buyers. Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
Two of the HMI’s three component indexes fell in August. The component gauging current sales conditions declined one point to 14, while sales expectations for the next six months fell three points to 18. The traffic of prospective buyers remained unchanged at 10.
Three out of four regions posted HMI declines in August. A six-point decline to 18 in the Northeast partially offset a big gain in that region in the previous month, while the South and West each saw one-point declines to 13 and 8, respectively. The HMI for the Midwest held even at 15 in August.