Builders’ confidence in the market for new single-family homes slid in January, as the National Association of Home Builders’ housing market index — a monthly gauge of builder sentiment — dropped to a record low of 8 from 9 last month, the group announced yesterday.
Thomson Reuters’ poll of economists predicted a level of 9.
“Clearly, conditions in the nation’s housing market aren’t getting any better, and they aren’t going to get any better until the federal government takes substantial action to encourage qualified buyers to get back in the market,” said NAHB chairman Sandy Dunn. “The Obama administration and the new Congress have a tremendous opportunity and responsibility to enact legislation that can spur home buyer demand and jump-start the national economy.”
“Builder views continue to track with historically low consumer confidence measures,” said NAHB chief economist David Crowe. “The fact that there has been microscopic movement in the historically low HMI and its component indexes over the last three months provides further evidence of the need for government action to rejuvenate housing demand. Qualified buyers are clearly in the wings, but they’re looking for a significant signal from the federal government that now is the time to return to the market.”
Derived from a monthly survey, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either “good,” “fair,” or “poor.” The survey also asks builders to rate traffic of prospective buyers as either “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.
Two of the three component indexes increased in January. The current single-family home sales index fell to 6 from 8, while the sales expectations index for the next six months slid to 17 from 16, and the traffic of prospective buyers index rose to 8 from 7.
