Builder Confidence Remains at Its Lowest Point
Builder confidence in the market for new single-family
homes remained unchanged in November due to continuing mortgage market
problems, a substantial inventory overhang and ongoing concerns about
the effects of negative media coverage, according to the latest National
Association of Home Builders/Wells Fargo Housing Market Index (HMI),
released today. The November HMI held even with October’s upwardly
revised 19 reading, its lowest point since the series began in January
of 1985.
“Consistent with what builders said in last month’s survey,
many are reporting that their special sales incentives are having limited
success in terms of getting buyers in the door,” said NAHB President
Brian Catalde, a home builder from El Segundo, Calif. Of particular concern,
he noted, is that negative media reports are dissuading buyers and fueling
unrealistic expectations regarding home price discounts.
“To be more specific,” Catalde said, “builders are worried
that the national media has tended to report negative housing stories as
if there is one real estate market, when, in fact, there is no such thing – all
housing markets are local. As a result, some healthy markets are being
unfairly impacted by this negative media coverage.”
“The message from today’s report is that builders do not see
any significant change in housing market conditions as compared to last
month,” said NAHB Chief Economist David Seiders. “While they
continue to work down inventories of unsold homes and reposition themselves
for the market’s eventual recovery, they realize it will be some
time before market conditions support an upswing in building activity – most
likely by the second half of 2008.”
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.
In November, the index gauging current sales conditions for single-family
homes remained flat at 18, while the index gauging sales expectations for
the next six months declined a single point to 25. The index gauging traffic
of prospective buyers rose two points to 17.
Regionally, the HMI results were mixed, with two regions reporting modest
HMI gains and two reporting slight declines. The HMI for the Northeast
gained one point to 27 and the HMI for the West gained three points to
18. Meanwhile, the HMI for the Midwest declined one point to 13 and the
HMI for the South declined two points to 19.
According to the NAHB, 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."
See HMI
tables online.
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