The NAHB/Wells Fargo housing market index for December remained unchanged from the previous month, still clocking in at 9--its historic low. Said NAHB chair Sandy Duncan, "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.
In an online survey, Big Builder found that 100% of respondents agreed.
"Consumer confidence has been replaced by consumer fear created at first by massive builder discounting and now increased by the behavior of banks and the terrible state of the national economy," said one respondent. "We were in a recession for 11 months before it was recognized by government officials, meaning there was no attempt to stave off its effect until it was too late. Now we are playing catch-up, and the remedies have been a disaster with the bailout of banks the biggest of them all."
When asked to suggest steps that home builders can take to counteract the effect of massive layoffs on consumer confidence, one respondent asserted that pricing had to remain competitive. Yet another noted that government intervention was necessary to get mortgage payments as low as possible, alleviate the credit crunch, and eliminate the fees and regulatory burden on housing.
The HMI index measuring sales expectations for the next six months fell to 16 for the month, down from 26 a year ago. Respondents were evenly split between those who agreed with the decline in sales expectations and those who were unsure.
Noted one respondent, "Unless the government takes dramatic action, this thing is going to get worse. Alt-A and some adjustable-rate mortgages are as toxic as subprime. Unemployment is on the rise. Confidence is shot."