Builder confidence continued to diminish this month amidst concerns about subprime lending and its impact on the mortgage market, according to yesterday's report from the National Association of Home Builders (NAHB). For the third consecutive month, the Association's Housing Market Index (HMI), which gauges builders' perceptions of current and future home sales, declined three points. The HMI now stands at 30, the lowest level since September 2006. An HMI below 50 indicates more builders view sales conditions as poor versus good.
'The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated,' said NAHB Chief Economist David Seiders. 'We're now projecting that home sales and housing production will not begin improving until late this year, and we're expecting the early stages of the subsequent recovery to be quite sluggish.'
All three HMI components decreased this month. The component measuring sales expectations for the next six months declined three points to 41, while the components gauging current sales and buyer traffic decreased to 31 and 23, respectively.
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