The NAHB/Wells Fargo Housing Market Index held steady at 16 in December, indicating the builders are still pessimistic about the new housing market. A reading of 50 suggests that builders are neither pessimistic nor optimistic. Traffic among prospective buyers slipped a point to 11.
"Builders are bracing themselves for a slow holiday season as a number of factors continue to cause uncertainty among consumers and builders alike," said NAHB Chairman Bob Jones.
"While the HMI is adjusted for seasonal factors, the typical cold-weather slowdown in sales activity is being accentuated by ongoing weakness in the job market, the rising number of foreclosures and short-sales, and very challenging credit conditions for both builders and buyers."
At 16, the index remains well off the lows established in early 2009, but the heavy number of foreclosures and short sales, which compete for a buyer’s attention, continues to depress overall sentiment.
As the chart below indicates, confidence is a good reflection of single-family housing starts, and based on the latest figures, there are few signs that a near-term recovery is on the horizon.
Absorption of foreclosures and a significant number of new jobs would go a long way in assisting builders and boosting the industry.
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