Credit tightening weighing on builder confidence.
The HMI declined two points to 22 in August, its lowest level since January 1991.
"Builders realize that issues related to mortgage credit cost and availability have become more acute, filtering some prospective buyers out of the market and prompting others to delay their decision to purchase a new home," said NAHB President Brian Catalde, a home builder from El Segundo, Calif. "Builders are responding by trimming prices and stepping up non-price incentives to bolster sales and limit cancellations, although we're dealing in a difficult market environment."
"There is no question that problems in the subprime mortgage sector have spilled over to other components of housing finance, including the Alt.-A and jumbo markets, delaying a revival of the single-family housing market," added David Seiders, NAHB's chief economist. "However, the government-related parts of the mortgage market still are functioning well and the underlying economic fundamentals promise to remain solid for some time, providing support to the longer-run housing outlook. We now expect to see home sales return to an upward path by early next year and we expect housing starts to begin a gradual recovery process by mid-2008. From there, the market will have plenty of room to grow in 2009 and beyond."
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 declined in August. The index gauging current single-family home sales fell a single point, to 23, while the index gauging sales expectations for the next six months declined two points to 32. The index gauging traffic of prospective buyers declined three points to 16.
Three out of four regions of the country posted declines in the August HMI. While the South's HMI reading remained unchanged at 25, the West recorded a one-point decline to 23, the Northeast posted a two-point decline to 30 and the Midwest posted a five-point decline to 14.
The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be accessed online at nahb.org/hmi. More information regarding housing statistics is also available at housingeconomics.com.
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|Publication:||New Hampshire Business Review|
|Date:||Sep 14, 2007|
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