WASHINGTON – Builder confidence in the market for newly built single-family homes fell for a third consecutive month in July, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The HMI fell below its previous record low of 18 in June to a new record low of 16 in July, with each of its three component indexes also hitting record lows.
“The worsening housing slump and the near-meltdown in financial markets last week makes it even more urgent for Congress to complete action on the housing bill now, a move that will help stabilize and restore confidence in housing and the U.S. economy,” said NAHB President Sandy Dunn, a home builder from Point Pleasant, WV.
A housing stimulus bill now being considered in Congress would provide a temporary tax credit of up to $8,000 for first-time home buyers, helping to stimulate sales, reduce the inventory of unsold homes on the market, stabilize house prices and halt the rapid deterioration of mortgage credit quality.
“Builders are reporting that traffic of prospective buyers has fallen off substantially in recent months,” said NAHB Chief Economist David Seiders. “Given the systematic deterioration of job markets, rising energy costs and sinking home values aggravated by the rising tide of foreclosures, many prospective buyers have simply returned to the sidelines until conditions improve,” he said. “An $8,000 tax credit, made available for a limited time, could be just the incentive needed to draw them into the game, and a policy-induced pickup in home sales could gain momentum further down the line.”
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