Home builders say business is looking as grim as they did back in December, when a monthly survey of hundreds of builders hit a record low.
The National Association of Home Builders/Wells Fargo housing market index fell this month to 18, down from 19 in May, the Washington trade group said Monday. The index had been holding steady at 20 from February through April, but the two-month drop indicates that builders see market conditions deteriorating.
“We’re really scraping along the bottom of history at this time,” David Seiders, the trade association’s chief economist, said during a conference call with reporters.
The report reflects a survey of 390 residential developers nationwide, who were asked to assess sales activity, customer traffic and expectations for single-family home sales over the next six months.
Index readings higher than 50 indicate positive sentiment about the market. The seasonally adjusted index has been below 50 since May 2006.
More than half of those surveyed described sales activity as poor, while fifty percent said they expected sales over the next six months to be poor.
And about 68 percent of respondents said their traffic of prospective buyers was low.
Homebuilders are struggling as the combination of falling home values, rising foreclosures and tighter lending standards have put off many would-be homeowners from entering the market.
Last week, two rating agencies slashed the debt ratings for several builders. And Fitch Ratings said it expects the housing market to perform worse than previously expected this year.
Meanwhile, the NAHB renewed its call on lawmakers to include a tax credit for home buyers in a housing stimulus package being considered in Congress.
“While the Fed has been very aggressive in trying to hold back the downfall in housing, it is now up to Congress to break that spiral,” said Jerry Howard, the NAHB’s chief executive. “Congress quite simply must finish the job and must do so now before the July 4 recess.”
The group, however, withdrew its support for a $6 billion emergency tax break that would let companies use losses from 2008 and 2009 to offset profits earned over the previous four years, instead of the usual two-year timeframe.
Such a provision would help big homebuilders, many of which have been saddled with massive losses over the past year.
But critics saw the proposal as a gift to homebuilders, many of which profited handsomely during the housing boom years, and the provision failed to build enough traction on Capitol Hill.
“Too much time has passed,” Howard said, “too many homebuyers are in trouble ... We need to look forward.”