Home Builder's Confidence Plunges Again In July

Discussion in 'Economics' started by SiSePuede!, Jul 17, 2007.

  1. Yeah, this is why I don't think Buffet is buying yet...he's smart enough not to catch falling knives.

    Home builders' confidence plunges again in July
    Housing starts could begin gradual recovery next year, builders say
    By Rex Nutting, MarketWatch
    Last Update: 1:01 PM ET Jul 17, 2007

    WASHINGTON (MarketWatch) - With interest rates moving higher, a glut of homes sitting unsold, and the problems in the subprime mortgage market worsening, U.S. home builders' confidence in the housing market plunged further in July, according to a monthly survey released by the National Association of Home Builders.
    The NAHB/Wells Fargo housing market index dropped four points to 24 in July, the lowest since the 20 recorded in January 1991 and the third lowest reading in the 22-year history of the survey.
    The index was at 39 a year ago and peaked at 72 in June 2005, when nearly three-fourths of builders were upbeat about the market.
    The decline in the home builders' index mirrors the massive slump in home building and home sales seen in the past two years. Starts of single-family homes are down 36% from the peak, while sales are down 20%.
    Economists surveyed by MarketWatch were expecting the builders' index to fall to 27 in July. See Economic Calendar.
    At 24, the index shows that about a fourth of all builders view the housing market as "good."
    "The bottom line is that the single-family housing market is still in a correction process following the historic and unsustainable highs of the 2003-2005 period," said David Seiders, chief economist for the builders' trade group.
    "Builders are actively trimming prices and offering buyer incentives to work down their inventories, but meanwhile there is a large supply of vacant existing homes on the market, and affordability problems persist despite efforts to attract buyers," Seiders said.
    Seiders said he expected home sales to begin to move up later this year, and said housing starts could begin "a gradual recovery process" early next year.
    The government will report its estimate for June housing starts on Wednesday. Economists expect a 1.6% drop to a seasonally adjusted annual rate of 1.45 million, the second lowest total in the past 10 years.
    Despite Seiders' hopes for a rebound, the builders throughout the nation grew more pessimistic in July. In all four regions, builder confidence was the lowest ever recorded in the three years since the regional data have been analyzed.
    The index is constructed by asking builders for their sentiment about current sales, projected sales and traffic of potential buyers through developments. Builders were more pessimistic about all three questions in July, with readings on the three subindexes plummeting to the lowest levels since early 1991.
    The index for sales of single-family homes dropped by five points to 24, the third lowest ever. The index for future single-family sales fell by five points to 34, the fifth lowest ever. The index for buyers' traffic fell by three points to 19, the fourth lowest ever. End of Story
    Rex Nutting is Washington bureau chief of MarketWatch.