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September proved the eighth straight month for a decline in the confidence of U.S. homebuilders, which reached its lowest level since February 1991, the National Association of Home Builders said today.
The NAHB and Wells Fargo conduct the builder-confidence survey – called the Housing Market Index – every month and asks builders to rate current single-family homes and their expectations for future sales on a scale of “good,” “fair” or “poor.” They also rate their perceptions of “traffic” – the number of potential buyers out looking for a home.
This month’s score of 30, down three points from August’s 33, reveals that most builders consider the market to be “poor.” A score of 50 would indicate a balance in the number of builders in the “good” and “poor” camps.
Some analysis from DowJones MarketWatch:
The index peaked at 72 in June 2005 and has fallen nine months in a row. It’s the fastest decline in the 21-year history of the index, which has had a fairly good record of predicting the number of new homes started.
San Diego homebuilder Hallmark Communities has been feeling the pinch, as have the local branches of several larger home builders. Hallmark’s CEO, Mike Hall, told me recently that his company had been pushed to halve its staff when executives observed an estimated 40-percent decrease in traffic, one of the HMI indicators defined above.
I wrote about Hall and other builders in a recent story. You can click here to read more.