Little Cheer in Builder Confidence in December
Builder confidence in the market for newly built single-family homes has held at a record low this month as deepening economic turmoil, a deteriorating job market and an ongoing flow of foreclosed homes onto the market continue to have a negative impact on sales conditions.
The NAHB/Wells Fargo Housing Market Index (HMI) for December showed no improvement from November’s all-time low reading of 9, with two out of three component indexes losing further ground.
“The crisis continues,” said NAHB Chairman Sandy Dunn. “While builders are doing everything we can in the way of price and non-price incentives to move new homes off the books, buyers are afraid to move forward, and in any case there is almost no way to compete with the cut-rate product that is continually flooding the market from mounting foreclosures. Congress and the Administration must step in with substantial incentives to bring qualified buyers back to the table, as well as with effective foreclosure relief programs, if we are to end this negative spiral that is weighing so heavily on our national economy.”
“We have seen no improvement over the past month in terms of sales conditions for new homes,” said NAHB Chief Economist David Crowe. “In fact, certain factors have gotten progressively worse, not the least of which is the job market, where massive layoffs are having a devastating effect on consumer confidence. At this point it will take definitive government action to stop the slide in home values and turn the tide of consumer sentiment. Expanding the first-time buyer tax credit and providing government action to reduce mortgage rates would go a long way toward arresting this downward spiral, just as a combination of similar moves worked in the 1970s to boost the housing market and economy.”
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 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 of the HMI’s component indexes registered some further deterioration in December. The index gauging current sales conditions and the index gauging sales expectations for the next six months each declined to new record lows, falling one point to 8and two points to 16, respectively. The index gauging traffic of prospective buyers held at a record low of 7 for the month.
Two out of four regions posted declining builder confidence readings in December, with the Midwest and South edging down one point and two points, to 6 and 10, respectively. The Northeast held even with the previous month’s reading of 11, while the West posted a one-point gain to 7.
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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.