Home builder confidence hit a record low in October, a likely reflection of builders’ assessments of the recent events on Wall Street, the rapid deterioration in job markets and the corresponding weakness in consumer confidence, an industry group said.
The National Association of Home Builders-Wells Fargo Housing Market Index (HMI) declined three points, to 14, after edging up slightly in September. When the index falls below 50, that indicates more builders view sales conditions as poor than good.
NAHB has been conducting the monthly survey for more than 20 years, and the group said results of the lastest poll are evidence that Congress needs to draft another economic stimulus package that includes "substantial" incentives to spur home buying.
"The impacts of the record-breaking housing contraction have spilled over to other key sectors of the economy and weighed heavily on financial markets, and stabilizing housing is now the best chance we have to limit the severity of recession," said NAHB Chief Economist David Seiders in a statement.
The National Association of Realtors this week also called for housing stimulus legislation that would include eliminating the repayment of the $7,500 first-time home buyer tax credit and expanding it to all home buyers, and making higher mortgage loan limits permanent to benefit buyers in high-cost areas (see story).
All three components of the NAHB-Wells Fargo index fell in October. Builders were more pessimistic about current sales conditions, sales expectations for the next six months and traffic by prospective buyers than they were in September.
The index gauging current sales conditions fell from 17 to 14 — a new low — and an index gauging sales expectations for the next six months fell from 28 to 19, also a new low. The index gauging traffic of prospective buyers declined two points, matching July’s record low of 12.
Every region posted declines in builder confidence in October, with four-point declines recorded in the Northeast and South, to 17 and 16, respectively, a three-point decline to 10 registered for the West, and a one-point decline to 14 posted in the Midwest.
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