According to a recent report by NAHB (National Association of Homebuilders), confidence among home builders in the US remained at a record low during December, and the 6-month outlook appears that conditions won’t improve during the beginning of 2009.
The National Association of Home Builders/Wells Fargo index of builder confidence stayed at 9 in December, according to the Washington-based association. A measure below 50 means most respondents accept conditions as poor.
While foreclosures continue to mount and continue to oversaturated real estate markets, builders’ are finding their profits are shrinking. Another issue is the lending standards that mortgage brokers have set, adding to the problem of getting home buyers approved, while further clogging the credit market.
Several economists and industry-experts have gone on the record with a similar message – that continued declines in prices will continue over the next 6-months. Stating that foreclosures are a main issue for preventing many builders’ ability to lower their inventories.
The median forecast of 36 economists surveyed by Bloomberg News predicted the builder confidence index would rise to 10 in December. The projections ranged between a decrease to 7 and a rise of 13. First published in January 1985, the gauge averaged 27 last year.
This survey asks that builders establish sales as “good,” “fair” or “poor” and to analyze prospective buyers’ traffic. In addition, the survey asks participating builders to approximate their position over the next six months.
Single-family home sales fell one point to 8, over November’s builders’ group index. The buyer traffic estimate remained at 7, while the evaluation of expected sales over the next two quarters has declined to 16, from 18 last month.
In December, confidence declined in two of the country’s four regions, with the major reductions occurring in the South, where the index dropped to 10 from 12 last month. In the Midwest, the measure also declined from 7 to 6 during the same period. The Northeast gauged remained steady at 11, while the West’s reading rose from 6 to 7 in November.
Sandy Dunn, chairman of the NAHB and a builder from Point Pleasant, West Virginia, said, “the crisis continues.” Dunn added that congress and the current administration should step in with with substantial incentives, aimed at bringing qualified buyers back to the table.
