NEW YORK - Builders’ confidence in the market for new single-family homes dropped, as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – fell to 13 in June from 16 in May.
Thomson Reuters' poll of economists predicted a level of 16.
“Builders are being squeezed by the continuing weakness in existing-home prices – against which they must compete -- as well as rising material costs,” said NAHB Chairman Bob Nielsen. “In addition to the ongoing impacts of distressed property sales on home prices, appraisal values and consumer confidence, rising costs for materials such as roofing, copper, wallboard, vinyl siding and other components have made it extremely difficult to construct a new home and sell it at a price that covers the costs.”
“Builder confidence has waned even further as economic growth has stalled, foreclosures have continued to hit the market and the cost of building a home has risen,” NAHB Chief Economist David Crowe said. “Meanwhile, potential new-home buyers are being constrained by difficulty selling their existing homes, stringent lending requirements, and general uncertainty about the economy. Economic growth must pick up in order for housing to gain the momentum it needs to get back on track.”
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 fell in June. The current single-family home sales index slipped to 13 from 15, and the sales expectations index for the next six months slumped to 15, tying its lowest-ever level, from 19. The traffic of prospective buyers index dropped to 12 from 14.
