Judging from responses to the July survey of their attitudes toward the market conducted by the National Association of Home Builders (NAHB), new home builders aren't expecting any sudden changes of fortune in their immediate futures.

Each month NAHB asks its members to describe their current perceptions of the market for new homes, their projections for six months in the future, and their measure of the current level of buyer traffic. From the responses, which are given along a continuum of poor to good in the first two instances and very low to very high in the third, NAHB constructs the NAHB/Wells Fargo Housing Market Index (HMI).  A score below 50 on any of the individual questions/components or the composite index indicates that more builders have a negative attitude toward the market than a positive one.  

The composite portion of the HMI declined two points from the June figure to 14.  This is the second straight month the index has decreased and the lowest level it has reached since April 2009. 

Each of the three component indexes also indicated a drop in confidence.  The component measuring current market conditions dropped two points to 15 while the component reflecting projections of conditions in six months was down one point to 21.  Builders' attitudes about the current buyer traffic they are seeing took the worst hit, dropping three points to 10.

"This month's lower HMI reflects a number of underlying market conditions that builders are seeing, including hesitant home buyers, tight consumer credit, and continuing competition from foreclosed and distressed properties that are priced below the cost of construction," said NAHB Chief Economist David Crowe. "The pause in sales following expiration of the home buyer tax credits is turning out to be longer than anticipated due to the sluggish pace of improvement in the rest of the economy. That said, we do believe that favorable factors such as low mortgage rates, affordable prices, and demographic trends will help revive consumer demand for new homes this year, and that new-home sales will improve by 10 percent in 2010 from 2009."

Regionally, the HMI July results were mixed. The Northeast, which has a smaller survey sample and therefore is prone to greater monthly volatility, posted a seven-point increase to 23 this month, while the Midwest posted a one-point improvement to 15. The South and West each posted five-point declines to 14 and 9, respectively. 

NAHB has conducted the home builder survey for 20 years.