Home-builders index slumps to 17-month low
Published: August 16, 2010
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MarketWatch.com reported Aug. 16 that home-builder confidence slumped in August to a 17-month low, according to a report released Monday, in another indicator of a tentative housing market.
The National Association of Home Builders/Wells Fargo Housing Market Index fell by one point to 13, its worst reading since March 2009. Economists polled by MarketWatch had anticipated a rise to 15.
To put in perspective, any reading over 50 indicates that more builders view conditions as good than poor. There hasn't been a reading over 50 since April 2006.
Builder pessimism is also reflected in the stock market -- both the SPDR S&P Homebuilder ETF and iShares Dow U.S. Home Construction Index Fund are mired near 52-week lows.
"Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren't gaining any traction," said NAHB Chairman Bob Jones in a statement.
"Meanwhile, many continue to report that problems with inaccurate appraisals, competition from the large number of distressed properties on the market, and tight consumer lending conditions are causing them to lose potential sales."
Two of the three component's indexes, current sales conditions and sales expectations for the next six months, fell in August. The component measuring traffic of prospective buyers held unchanged.
The NAHB index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low."
On Tuesday, Aug. 17 July housing starts figures will be released. Economists polled by MarketWatch expect an uptick to 555,000 from 549,000.
