Builder Confidence at a Record-Low Ebb in September
Concerns about the substantial inventory of new homes for sale and the impact of deepening mortgage market problems on home buyer demand have undermined builder confidence this month, pushing down the NAHB/Wells Fargo Housing Market Index (HMI) for the seventh consecutive month.
The HMI for September dropped two points to 20, tying its record low of January 1991. The series began in January 1985.
“Builders are expressing concern that home buyers are getting spooked by the many headlines they are seeing on mortgage market issues and their continuing effects on the housing market and home prices,” said NAHB President Brian Catalde. “Indications are that consumers are trying to time the bottom of the market before making their purchase, which historically can be a very tricky thing to do and is typically not an advisable strategy. The bottom line is, with the inventory situation what it is and the selection of units and deals to be had, now is a very good time to buy a home.”
“Certainly, problems across the mortgage finance arena are taking their toll on buyer demand, which is weighing heavily on builder confidence measures,” said NAHB Chief Economist David Seiders. “Even so, availability of mortgages under the government-supported part of the market remains very good, and the long-term fundamentals of housing are solid in terms of projected household formations, income growth and other factors. We now expect to see home sales return to an upward path by the second quarter of 2008 and we expect housing starts to begin a gradual recovery process by the third quarter of next year. At that point, the market will have substantial growth potential.”
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.
Two out of three component indexes declined in September. The index gauging current single-family home sales declined two points to 20, while the index gauging sales expectations fell five points to 26. The index gauging traffic of prospective buyers held steady at 16.
All four regions of the country reported declines in their September HMI readings. The index dropped three points to 26 in the Northeast, two points to 22 in the South, four points to 18 in the West and one point to 13 in the Midwest.
Attend the Fall Construction Forecast Conference on Oct. 24
Plan to attend NAHB's Construction Forecast Conference on Oct. 24 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry.
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For more information, or to register for the conference or webcast, visit www.nahb.org/cfc.
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Free NAHB Kit Gives Builders Back-to-Basics Tips in 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.