Builder Confidence Plunges as Consumers Hunker Down
As consumers continued to retreat in the face of growing uncertainties over the financial markets, jobs and the economy, builder confidence in the market for newly built single-family homes plunged five points this month to a reading of 9 on the NAHB/Wells Fargo Housing Market Index (HMI), the lowest level recorded since the series was created in January of 1985.
"The November report shows that we are in a crisis situation. If there's any hope of turning this economy around, Congress and the Administration need to focus on stabilizing housing," said NAHB Chairman Sandy Dunn.
"Tremendous economic uncertainties have driven consumers from the housing market, and it's going to take some major incentives to bring them back,” Dunn said. “Beyond the work that is being done to help reduce foreclosures, Congress must immediately incorporate such incentives for qualified buyers in a new economic recovery package."
"The housing downturn has already cost America three million jobs in construction and related industries, and this downward momentum cannot be stemmed without substantive government intervention," agreed NAHB's new chief economist, David Crowe.
"Congress should consider significant consumer incentives such as expanding the first-time home buyer tax credit and providing a government buy-down of mortgage interest rates for home purchasers,” he said. “Both policies were successfully combined in the 1970s to stimulate home buyer demand and could get housing and the national economy moving again."
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.
Two out of three of the HMI's component indexes declined in November. The index gauging current sales conditions fell six points to a record low of 8. Builder confidence in prospective buyer traffic skidded four points to a record low of 7.
The index gauging sales expectations for the next six months held firm from the previous month at a record low of 19.
Builders in every region lost confidence in November. The Northeast, South and West each registered five-point declines to 11, 11 and 6, respectively, while the Midwest saw a six-point decline to 7.
Construction Forecast Conference Webcast Available
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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.