According to a recent report by Bloomberg’s Shobhana Chandra, confidence among home builders in the United States remained at a record low in December, and the six month outlook suggests that conditions might not improve until 2010.
The National Association of Home Builders/Wells Fargo index of builder confidence held at 9 this month, the Washington-based association said today. A reading below 50 means most respondents view conditions as poor.
As foreclosures continue to mount and add to the oversaturated real estate markets, builders’ are continuing to see their profits shrink. Another part of the problem is the lending standards that mortgage lenders have set, causing further difficulty with getting home buyers approved and further adding to the clogged credit market.
Many economists and industry experts have gone on record stating that continued declines in home values will continue in coming months. Noting that foreclosures are a main issue for preventing many home building companies’ ability reduce their inventories.
Apparently the median forecast of 36 economists surveyed by Bloomberg News had forecasted the builder confidence index to rise to 10 in December. The projections ranged between a drop to 7 to a rise of 13. First published in January 1985, the gauge averaged 27 in 2007.
The confidence survey requests that builders determine sales as “good,” “fair” or “poor” and to calculate prospective buyers’ traffic. Furthermore, the survey asks participating builders to estimate the outlook for the following six months.
Single-family home sales dropped a point to 8, over November’s builders’ group index. The buyer traffic gauge remained at 7, while the measure of expected sales over the next six months declined to 16, from 18 last month.
In December, confidence dropped in two of the country’s four regions, with the largest decreases 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 constant 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.
Posted by ricknhs 
