WASHINGTON, SEPT. 18 - Reflecting increasing builder concerns
about conditions in the market for new single-family homes, the
National Association of Home Builders/Wells Fargo Housing Market
Index (HMI) declined for an eighth consecutive month to a level
of 30 in September. This amounted to a three-point drop from an
upwardly revised 33 reading in August, and is the lowest level
the index has reached since February of 1991.
"Builders are adopting an increasingly cautious attitude in
their near-term outlook for new-home sales," said NAHB Chief
Economist David Seiders. "They're experiencing falling sales, rising
sales cancellations, and increasing inventories of unsold units.
And although many builders are offering substantial incentives to
bolster sales and limit cancellations, many potential buyers now
are waiting on the sidelines to see how the market shakes out
before proceeding with a home purchase.
"We are in the midst of an anticipated adjustment period as the
housing market subsides from the record-breaking and
unsustainable highs of the past few years," Seiders noted. "Our forecast
projects the numbers flattening out around the middle of next year
and gradually moving back up towards trend in 2008.
"That said, long-term housing fundamentals will be very
favorable," he added. "In fact, the housing market that emerges from
this correction will have better balance between supply and demand
and will be able to ride on excellent underlying fundamentals
for years to come."
Derived from a monthly survey that NAHB has been conducting for
21 years, the NAHB/Wells Fargo HMI gauges builder perceptions of
current single-family homes 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 either "high to
very high," "average" or "low to very low." Scores for each
component are then used to calculate a seasonally adjusted index
where any number over 50 indicates that more builders view sales
conditions as good than poor.
Two of the three component indexes declined in August. The
component that gauges current single-family home sales declined five
points to 32, while the component gauging expected sales in the
next six months fell four points to 37. The component gauging
traffic of prospective buyers remained even from last month, at
22.
The HMI fell in three out of four regions in September. The
largest decline was registered in the Northeast, where a six-point
drop brought the HMI to 28. The HMI fell five points to 38 in the
West and fell three points to 38 in the South. The HMI held
steady at 16 in the Midwest, where fundamentally weak economic
conditions continue to weigh on the market.
EDITOR'S NOTE: The NAHB/Wells Fargo Housing Market Index is
strictly the product of NAHB Economics, and is not seen or
influenced by any outside party prior to being released to the public.
HMI tables can be accessed online at:
www.nahb.org/hmi. More
information regarding housing statistics is also available at
www.housingeconomics.com.
ABOUT NAHB: The National Association of Home Builders is a
Washington-based trade association representing more than 225,000
members involved in home building, remodeling, multifamily
construction, property management, subcontracting, design, housing
finance, building product manufacturing and other aspects of
residential and light commercial construction. Known as "the voice of
the housing industry," NAHB is affiliated with more than 800 state
and local home builders associations around the country. NAHB's
builder members will construct 80 percent of the more than 1.93
million new housing units projected for 2006, making housing one
of the largest engines of economic growth in the century.
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