Builder Confidence Slides More in June
Ongoing concerns about subprime-related problems in the mortgage market and newfound concerns about rising prime mortgage rates have caused builder confidence in the demand for single-family homes to dip two more points this month on the NAHB/Wells Fargo Housing Market Index (HMI).
With a reading of 28, the HMI has now reached the lowest ebb so far of the current down cycle and is at its lowest point since February 1991.
“Builders continue to report serious impacts of tighter lending standards on current home sales as well as cancellations, and they continue to trim prices and offer a variety of non-price incentives to work down sizeable inventory positions,” said NAHB President Brian Catalde.
“It’s clear that the crisis in the subprime sector has prompted tighter lending standards in much of the mortgage market, and interest rates on prime-quality home mortgages have moved up considerably during the past month along with long-term Treasury rates,” added NAHB Chief Economist David Seiders. “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. As a result, we expect housing to exert a drag on economic growth during the balance of 2007.”
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and 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 June. The index gauging current single-family sales slipped two points to 29, sales expectations for the next six months fell two points to 39 and traffic of prospective buyers fell one point to 21.
Three out of the four regions in the country posted declines in the June HMI. The Midwest slipped three points to 19, the South was down one point to 32 and the West fell five points to 27. Following a three-point slide in May, the Northeast picked up three points to register 35 on the index.
Construction Forecast Conference Discussions 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.
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