Daily Briefing Weekend Edition

Builder Confidence Falls Again

By Jennifer Harmon

Builder confidence in the market for newly built single-family homes hit another new low in July when it fell to 16 from the previous record low of 18 seen in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index. "Given the systematic deterioration of job markets, rising energy costs and sinking home values aggravated by the rising tide of foreclosures, many prospective buyers have simply returned to the sidelines until conditions improve, said NAHB chief economist David Seiders in a press release.

The NAHB/Wells Fargo index is derived from a monthly survey by the former group that asks builders to rate traffic by perspective buyers as "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," the NAHB said. "Each of the HMI's component indexes fell to new record lows in July," said the association.

"The index gauging current sales conditions declined one point to 16, the index gauging sales expectations in the next months fell four points to 23, and the index gauging traffic of prospective buyers also receded four points, to 12.

"All but one region showed declines in builder confidence in July. The Midwest declined six points to 10, its lowest HMI score since the regional detail was introduced in December of 2004, while the West matched a record low set in January 2008 with its three-point decline to 13. The South posted a one-point decline to 20.

"The Northeast was the only region to post a gain in July's HMI, rising two points to 14 from the previous month's record low of 12."