NAHB report: Builder confidence declines further in JulyMortgagePress.comNAHB, National Association of Home Builders, HMI, home builders,
Builder confidence in the market for newly built single-family
homes fell for a third consecutive month in July, according to the
National Association of Home Builders/Wells Fargo Housing Market
Index (HMI), released today. The HMI fell below its previous record
low of 18 in June to a new record low of 16 in July, with each of
its three component indexes also hitting record lows.
"The worsening housing slump and the near-meltdown in financial
markets last week makes it even more urgent for Congress to
complete action on the housing bill now, a move that will help
stabilize and restore confidence in housing and the U.S. economy,"
said NAHB President Sandy Dunn, a home builder from Point Pleasant,
W. Va.
A housing stimulus bill now being considered in Congress would
provide a temporary tax credit of up to $8,000 for first-time home
buyers, helping to stimulate sales, reduce the inventory of unsold
homes on the market, stabilize house prices and arrest the rapid
deterioration of mortgage credit quality.
"Builders are reporting that traffic of prospective buyers has
fallen off substantially in recent months," said NAHB Chief
Economist David Seiders. "Given the systematic deterioration of job
markets, rising energy costs and sinking home values aggravated by
the rising tide of foreclosures, many prospective buyers have
simply returned to the sidelines until conditions improve, he said.
An $8,000 tax credit, made available for a limited time, could be
just the incentive needed to draw them into the game, and a
policy-induced pickup in home sales could gain momentum further
down the line."
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 and sales
expectations for the next six months as "good," "fair" or "poor."
The survey also asks builders to rate traffic of prospective buyers
as "high to very high," "average" or "low to very low." 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.
Each of the HMI's component indexes fell to new record lows in
July. The index gauging current sales conditions declined one point
to 16, the index gauging sales expectations in the next months fell
four points to 23, and the index gauging traffic of prospective
buyers also receded four points, to 12.
All but one region showed declines in builder confidence in
July. The Midwest declined six points to 10, its lowest HMI score
since the regional detail was introduced in December of 2004, while
the West matched a record low set in January 2008 with its
three-point decline to 13. The South posted a one-point decline to
20. The Northeast was the only region to post a gain in July's HMI,
rising two points to 14 from the previous months record low of
12.
For more information, visit www.nahb.com.
