WASHINGTON, DC —Ongoing concerns about sub-prime mortgage lending problems caused builder confidence about the state of housing demand to decline three more points in May, according to the National Assn. of Home Builders/Wells Fargo Housing Market Index (HMI), released on May 15. The HMI has returned to its lowest level of 30, which was previously hit in September 2006.
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the HMI gauges builder perceptions of current single-family home sales and projected sales over the next six months, and also asks builders to rate sales traffic. All three component indexes declined in May, and three of the four regions posted declines, with only the Midwest gaining one point in HMI rating.
“The crisis in the sub-prime 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 Selders. “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.”
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