NEW YORK - Builders’ confidence in the market for new single-family homes rose in September, as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – slipped to 18 in October from 19 in September, the group announced this afternoon.
Thomson Reuters' poll of economists predicted a level of 20.
"It comes as no surprise that after trending upward from an historic low in January, the HMI’s positive momentum now appears to have stalled," NAHB Chairman Joe Robson said. "Our economists have repeatedly warned that the approaching expiration of the $8,000 home buyer tax credit on Nov. 30, combined with the massive hurdles that builders face in obtaining construction financing and appropriate appraisals on new homes, could derail the fragile recovery in housing just as it is starting to take shape." He urged Congress to expand and extend the tax credit for a year.
“This is the first time since November of 2008 that all three component indexes of the HMI have declined,” noted NAHB Chief Economist David Crowe. “Clearly, builders are experiencing the effects of the expiring tax credit on their sales activity, since it would be virtually impossible at this point to complete a new home sale in time to take advantage of that buyer incentive before Nov. 30.”
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 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.
All three component indexes slid in October. The current single-family home sales index fell to 17 from 18 last month, and the traffic of prospective buyers index slid to 14 from 17. The sales expectations index for the next six months dipped to 27 from 29.
