WASHINGTON – Builders’ confidence in the single-family home market remains bleak, according to a National Association of Home Builders / Wells Fargo report released this afternoon.
Their overall Housing Market Index was unchanged from a revised October level of 19 points, the lowest score since the HMI began in 1985, the association said. (Fifty points is the neutral value, with lower levels indicating that most respondents view conditions as poor.) Yet that dismal score still outshone the 17-point mean forecast from a Bloomberg News survey of economists whose predictions ranged from 16 to 19.
The NAHB cited “continuing mortgage market problems, a substantial inventory overhang and ongoing concerns about the effects of negative media coverage.” Last year, the index averaged 42 points.
Among the HMI’s components, the index for single-family homes was flat in November at 18 points. The index of sales expectations over the next half-year fell 1 point to 25, while the index gauging traffic of prospective buyers rose 2 points to 17.
“Consistent with what builders said in last month’s survey, many are reporting that their special sales incentives are having limited success in terms of getting buyers in the door,” NAHB President Brian Catalde, a home builder from El Segundo, Calif., said in the report, adding: “Builders are worried that the national media has tended to report negative housing stories as if there is one real estate market …. As a result, some healthy markets are being unfairly impacted.”
Performance varied by region, with the Northeast’s HMI rising 1 point to 27 and the West’s gaining 3 points to 18, while the Midwest fell 1 point to 13 and the South lost 2 points to 19.
“The message from today’s report is that builders do not see any significant change in housing market conditions as compared to last month,” David Sieders, the NAHB’s chief economist, said in a statement this afternoon “While they continue to work down inventories of unsold homes and reposition themselves for the market’s eventual recovery, they realize it will be some time before market conditions support an upswing in building activity – most likely by the second half of 2008.”
“The homebuilding industry is certainly picking up the impact of the credit crunch,” Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis, told Bloomberg News. “Inventories remain too high, and builders will be cutting back on construction in the months ahead.”
The National Association of Home Builders, a trade group founded in 1942, produces in-depth economic analyses of the home building industry based on private and government data. To learn more, visit www.nahb.org.
