December, in the view of home builders, is as miserable as November was, and November was the worst month ever.
The National Association of Home Builders/Wells Fargo Housing Market Index, released Monday afternoon, remained stuck at 9, the all-time low posted in November as the deteriorating economy took a further toll on the moribund housing market. The reading was two points below what home building analysts on Wall Street were expecting.
Two of the three component indices fell in December, with the index gauging current sales conditions and the index gauging sales expectations for the next six months each declined to new record lows, falling one point to 8 and two points to 16, respectively. The index measuring traffic of prospective buyers held at the November record low of 7. All three indices, as well as the HMI itself, are based on a score of 100 in which any reading over 50 indicates more builders view the market positively and under 50 indicates a negative view.
Regionally, the Midwest fell one point to 6 and the South two points 10. The Northeast held steady; the West posted a one-point gain to 7.
"We have seen no improvement over the past month in terms of sales conditions for new homes," said NAHB Chief Economist David Crowe. "In fact, certain factors have gotten progressively worse, not the least of which is the job market, where massive layoffs are having a devastating effect on consumer confidence. At this point it will take definitive government action to stop the slide in home values and turn the tide of consumer sentiment."
The NAHB repeated its call for legislation that would provide a tax credit for all home buyers and a government buy-down of mortgage rates as put forth by the Fix Housing First coalition.
"The crisis continues," said NAHB chairman Sandy Dunn, a home builder from Point Pleasant, W. Va. "While builders are doing everything we can in the way of price and non-price incentives to move new homes off the books, buyers are afraid to move forward, and in any case there is almost no way to compete with the cut-rate product that is continually flooding the market from mounting foreclosures."