NEW YORK - Builders’ confidence in the market for new single-family homes slipped back to February levels in June, as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment – dropped to 17 from May’s 22, the group announced today.
Thomson Reuters' poll of economists predicted a level of 21.
“The home buyer tax credit did its job in stoking spring sales and we expected a temporary pull back in the builders’ outlook after the credit expired at the end of April,” said NAHB Chairman Bob Jones. “However, the reduction in consumer activity may have been more dramatic than some builders had anticipated, which resulted in their lower confidence levels.”
“We expected some softening in the market following the expiration of the home buyer tax credit and this report seems to verify this assumption,” NAHB Chief Economist David Crowe said. “In the coming months, an improving economy, rising employment, low mortgage rates and stabilizing home values should help the housing market move forward. But as today’s HMI data shows, builders still remain very cautious and are aware that several factors could impede the nascent housing recovery, including serious problems in obtaining financing for the production of housing, faulty appraisal practices and competition from short sales and foreclosed properties.”
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 slumped to 17 from 22, and the sales expectations index for the next six months dropped to 23 from 27. The traffic of prospective buyers index slid to 14 from 16.
