A key gauge of homebuilders' confidence remained at a record low this month, as builders continued to be overwhelmingly discouraged in the prospects of a housing turnaround amid a worsening U.S. economy and rising unemployment and foreclosures.
The National Association of Home Builders/Wells Fargo housing market index held at nine in December for the second month in a row.
Index readings higher than 50 indicate positive sentiment about the market. But the index has drifted below 50 since May 2006 and has been below 20 since April. The slide in builders' confidence sharpened this fall in the wake of the U.S. financial crisis, slipping three points in October and then five points in November.
"The crisis continues," NAHB Chairman Sandy Dunn said in a statement. "Congress and the Administration must step in with substantial incentives to bring qualified buyers back to the table as well as effective foreclosure relief programs if we are to end this negative spiral that is weighing so heavily on our national economy."
Homebuilders have asked Congress to enact a 10 percent tax credit of up to $22,000 for homebuyers that purchase a home over the next year. They also are seeking a temporary interest-rate reduction on 30-year mortgages.
Government incentives are needed, homebuilders contend, because many buyers are fearful of jumping into the housing market due to uncertainty over the economy and how much longer the three-year slide in home prices will continue.
"We have seen no improvement over the past month in terms of sales conditions for new homes," said David Crowe, the association's chief economist. "In fact, certain factors have gotten progressively worse, not the least of which is the job market, where massive layoffs are having a devastating effect on consumer confidence."
Major public builders such as D.R. Horton Inc., KB Home, and Centex Corp., have seen their stocks hammered as housing woes have worsened.
The latest builder index reflects a survey of 426 residential developers nationwide, tracking builders' perceptions of market conditions.
The builders' gauge of current sales conditions fell one point to eight, while expectations for sales over the next six months declined two points to 16, the NAHB said.
The index of foot traffic by prospective buyers remained unchanged at a record low of seven.
Regionally, builder confidence declined in the Midwest by one point to six. In the South, it slipped two points to 10. The index held steady in the Northeast at 11 and rose in the West by one point to seven.