Builder confidence in the state of the new single-family housing market sank to a new historic low in October, the National Association of Home Builders reported Thursday.
The NAHB/Wells Fargo Housing Market Index (HMI) sank to a reading of 14 for the month, three points below September and two points below its previous historic low of 16 set in June and July of this year. A reading above 50 indicates a plurality of builders holding a positive view of the market, below 50, a negative view.
All three components of the overall index fell to new lows in October. The index for current sales conditions sank three points to 14; that for the next six months fell nine ponts to 19. The index gauging traffic of prospective buyers declined two points, returning to July¹s record low of 12.
Regionally, the HMI fell four points in the Northeast to 17, four points in the South to 16, three points in the West to 10 and one point in the Midwest to 14.
"Undoubtedly, today¹s HMI reflects builder assessments of the recent events on Wall Street, the rapid deterioration in job markets and the corresponding weakness in consumer confidence," said David Seiders, chief economist at NAHB. "This report provides clear evidence that an additional economic stimulus package is needed, including a substantial incentive to spur home buying."
Analysts expected the October index to remain at the September level of 17.David Goldberg, home building analyst at UBS Investment Bank, was expecting the index to come in at 16. In a research note to investors, Goldberg said, "Although this is a new low, it is in line with our recent channel checks that suggest conditions in the housing market continued to deteriorate over the past few months." He added, "We continue to believe a trough in fundamentals is unlikely to materialize until second half, 2009 at the earliest."