The Housing Market Index (HMI) release
today by the National Association of Home Builders (NAHB)/Wells Fargo remained
virtually unchanged for the sixth month in a row. The index which measures home builders' confidence
in the market for newly built, single-family houses, slid by a single point in
September to 14. It has moved within the
13 to 16 point range since mid-winter.
The HMI is derived from a monthly survey
of new home builders which asks them to assess both current new home sales and
their expectations for sales in six months as "good," "fair," or "poor." Builders are also asked to rate the traffic
of prospective buyers as "high to very high," "average" or "low to very
low." Any score of 50 or more on the three
components or on the composite HMI indicates that more builders view conditions
as good than view them as poor.
Answers given to all three questions
resulted in lower scores. The component measuring current sales conditions
decreased from 15 to 14 while attitudes about sales expectations for the next
six months drove that component down two points to 17. The measure of traffic of prospective buyers
was 11, a loss of two points since August.
"Very little has changed in terms of housing market conditions so far this
year," said NAHB Chairman Bob Nielsen. "Builders continue to confront the same
challenges in accessing construction credit, obtaining accurate appraisal
values for new homes, and competing against foreclosed properties that they
have seen for some time. Beyond this, both builder and consumer confidence took
a hit in recent weeks with the market disruptions caused by the S&P
downgrade and congressional gridlock on the budget deficit."
"The fact that the HMI continues to hover within such a narrow, low range
reflects builders' awareness that many consumers are simply unwilling or unable
to move forward with a home purchase in today's uncertain economic climate,"
added NAHB Chief Economist David Crowe. "While some bright spots are
beginning to emerge in about a dozen select metro areas, the broader picture
remains fairly bleak due to the weak economy and job market."
Regional results echoed the national attitude; only in the Midwest, where
the index rose one point to 11, showed positive movement. The Northeast and South each declined two
points to 15 and the West lost three points to score 12.