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Financial Tumult Shakes Builder Confidence in October
Reflecting profound uncertainties tied to the financial tumult of recent weeks, builder confidence in the market for new single-family homes receded to a record low of 14 this month after edging up slightly in September, according to the latest NAHB/Wells Fargo Housing Market Index (HMI).
“Not surprisingly, builder confidence has taken a heavy hit from the recent financial market crisis,” noted NAHB Chairman Sandy Dunn. “We applaud the coordinated government efforts that have been undertaken to try to stem the panic on Wall Street and ease the impacts on Main Street, and we stand ready to support additional efforts to help stabilize housing and the national economy going forward.”
“Undoubtedly, today’s HMI reflects builder assessments of the recent events on Wall Street, the rapid deterioration in job markets and the corresponding weakness in consumer confidence,” noted NAHB Chief Economist David Seiders.
“This report provides clear evidence that an additional economic stimulus package is needed, including a substantial incentive to spur home buying,” Seiders said. “The impacts of the record-breaking housing contraction have spilled over to other key sectors of the economy and have weighed heavily on financial markets, and stabilizing housing is now the best chance we have to limit the severity of a recession.”
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.
All three component indexes fell this month. The indexes on current sales conditions and sales expectations for the next six months each hit new lows, falling three points to 14 and nine points to 19, respectively. The index gauging prospective buyer traffic dropped two points, returning to July’s record low of 12.
Builder confidence soured in every region of the country in October, with four-point declines recorded in the Northeast and South, to 17 and 16, respectively; a three-point decline to 10 in the West; and a one-point decline to 14 posted in the Midwest.
 Attend or View the NAHB Construction Forecast Conference
Don't miss NAHB's 2008 Fall Construction Forecast Conference and Webcast for the latest economic news about the housing industry.
Join NAHB on Oct. 22 in Washington, D.C., where the country’s leading economists and finance experts will provide insight into the uncertainties of the housing market.
Onsite registration is available the day of the conference.
To register for the Webcast, and to see the full conference agenda, visit www.nahb.org/cfc.
 Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2008 to 2009 Metro Forecast (free preview).
Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
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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