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Housing Market Index in September Continues August's Dismal Level

By Marlene Y. Satter

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Figures released Monday for the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for September held steady at 13, tying August’s low.

Bob Jones, chairman of the NAHB, said in a statement, “In general, builders haven’t seen any reason for improved optimism in market conditions over the past month.” Jones, a home builder from Bloomfield Hills, Mich., continued, “If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential home buyers feel more secure about the job market and economy.”

David Crowe, NAHB’s chief economist, said builders saw the two main obstacles in the home market as consumer worries over job security and the large pool of foreclosed properties available. “However,” said Crowe, “we do expect that moderate improvement in the job market will help boost consumer confidence and improve conditions for new-home sales in this year's final quarter.”

The chart at top shows how far the NAHB/Wells Fargo HMI has declined since the peak of the housing market–and builders' confidence–in January 2006.

The HMI, which has been conducted monthly for more than 20 years, gauges builder sentiment on such things as current and future sales expectations for single-family homes, classifying them as good, fair, or poor; it also asks builders to rate prospective buyer traffic. Scores are calculated into a seasonal index; any rating over 50 shows that more builders view conditions as good than poor.

Current and future sales ratings are unchanged from their August levels at 13 and 18, respectively. Traffic scores dropped one point, to nine.