Builder Confidence Stuck in a Rut in June
Builder confidence in the market for newly built single-family homes has edged down this month, according to the NAHB/Wells Fargo Housing Market Index (HMI), slipping to 18 and returning to the record low posted in December of 2007.
“Clearly, conditions in the housing market remain very weak, and our builder members are not seeing any signs of improvement,” noted NAHB Chief Economist David Seiders.
“Indeed, the continuing erosion of employment and consumer confidence/sentiment, coupled with surging energy costs, falling house prices and rising home mortgage foreclosures, pose considerable downside risks to the economy and our housing forecast,” Seiders said. “A targeted stimulus such as a temporary home-buyer tax credit would help turn this situation around and restore housing as an engine of economic growth.”
Started in January of 1985 and 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.
The HMI’s component indexes gauging current sales conditions and sales expectations for the next six months each remained unchanged in June, at 17 and 28, respectively. Meanwhile, the component gauging traffic of prospective buyers fell a single point to 17.
Regional results, which have shown characteristic volatility on the index, were mixed this month. The Northeast posted a six-point decline to 12 — its lowest-ever reading since index numbers first started being broken down by region in December of 2004. Meanwhile, the Midwest posted a five-point gain to 17, the South was unchanged at 22 and the West posted a four-point decline to 16. All regions are down dramatically from their respective peaks in 2005.
“Today’s numbers are a reflection of how much our members are hurting as this downturn in housing markets continues,” said NAHB President Sandy Dunn. “Many are small-business owners who are the backbone of their local economies, and in some cases they are having to lay off family members and friends just to stay afloat. Congress can’t act too quickly to help reverse this trend.”
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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.