Noting that mortgage issues and excess inventory continue to impact home builders, the NAHB today announced that its Housing Market Index held steady in December, at a record-low of 19.
The NAHB/Wells Fargo HMI tracks builder perceptions and expectations of current and future single-family home sales. An index score of 50 denotes equilibrium between positive and negative assessments of the sales environment.
Builders' outlook on sales conditions has not changed in the last three months, with the HMI holding steady at its all-time low of 19 since October.
"Many builders are bracing themselves for the winter months when home buying traditionally slows, scaling down their inventories and repositioning themselves for the time when market conditions can support an upswing in building activity--most likely by the second half of 2008," said NAHB chief economist David Seiders in a statement.
The HMI measures builder sentiment in three areas: current single-family home sales, single-family home sales over the next six months, and traffic of prospective buyers.
The index of current single-family home sales improved from 18 to 19 in December, while the index of sales over the next six months improved two points to 26. But not all the news was good; the index of prospective buyer traffic fell from 17 to 14 in December.
In an e-mail to BUILDER Online, Seiders predicted sales would fall further, bottoming in the first quarter of 2008. "And the inventory overhang should keep starts down through mid-2008," he said.
NAHB also tabulates the HMI by region. The West held steady at 18; the Midwest saw its indicator increase from 13 to 15; and the South improved from 19 to 21.
The Northeast, however, fell from 26 to 19 in December, and all regions were down year-over-year.
Calling recent actions by Congress and the White House to ease the pain of subprime mortgage woes "a step in the right direction," NAHB president Brian Catalde, a home builder from El Segundo, Calif., urged the federal government not to drop the ball.
"Congress must now move quickly to achieve final enactment of these bills into law as well as key legislation to accomplish oversight reform for Fannie Mae and Freddie Mac," Catalde said in a statement. "Together with the Bush Administration's recently announced plan to freeze rates on certain adjustable-rate subprime mortgages, these are essential measures for improving credit liquidity, restoring consumer confidence, and reviving the overall housing market and economy."