NEW YORK - Builders’ confidence in the market for new single-family homes slipped back to its lowest level in more than a year, as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – dropped to 14 in July from June’s downwardly revised 16, originally reported as 17, the group announced Monday.
Thomson Reuters' poll of economists predicted a level of 16.
“We continue to see a lull in home buying activity following the expiration of the federal home buyer tax credit program, as many of the sales that would have occurred this summer were likely pulled forward to meet that program’s deadline,” said NAHB Chairman Bob Jones. “In addition, builders are reporting continuing consumer hesitancy regarding home purchases due to uncertainty in the overall economy and job markets.”
“This month’s lower HMI reflects a number of underlying market conditions that builders are seeing, including hesitant home buyers, tight consumer credit, and continuing competition from foreclosed and distressed properties that are priced below the cost of construction,” NAHB Chief Economist David Crowe said. “The pause in sales following expiration of the home buyer tax credits is turning out to be longer than anticipated due to the sluggish pace of improvement in the rest of the economy. That said, we do believe that favorable factors such as low mortgage rates, affordable prices, and demographic trends will help revive consumer demand for new homes this year, and that new-home sales will improve by 10 percent in 2010 from 2009.”
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 July. The current single-family home sales index slumped to 15 from 17, and the sales expectations index for the next six months dropped to 21 from 22. The traffic of prospective buyers index slid to 10 from 13.
