National Association of Home Builders/Wells Fargo Housing Market IndexThe U.S. housing sector took another hit this month according to the National Association of Home Builders' Housing Market Index, which unexpectedly fell to 13 in August -- a 17-month low -- as homebuilder confidence continued to drift lower following the end of the federal homebuyers tax credit this spring.

Economists surveyed by Bloomberg had expected the index to rise to 15 in August from 14 in July. The index was at 17 in June. It hit a cycle-low of 8 in January 2009 and an all-time high of 72 in June 2005. Index levels over 50 indicate that more builders view sales conditions as good than poor.

Two of the index's three components fell in August. The component gauging current sales conditions dipped to 14 from 15 in July, and the six-month sales expectations component declined to 18 from 21. Traffic of prospective buyers component was unchanged at 10.

However, the report did offer one modest bright spot: Though the housing market index fell in three of the four U.S. regions, results for the Midwest region held even in August at 15. Regional indexes declined 1 point in the South and West, to 13 and 8, respectively; and plunged 6 points to 18 in the Northeast.

Excess Inventory Weighing on Builder Sentiment

NAHB chief economist David Crowe said the attitude of homebuilders reflects a sector that's still trying to come to terms with the large inventory of unsold homes stemming from a smaller U.S. workforce and a large increase in foreclosed homes.

"Today's report reflects single-family home builders' concerns about current and future economic conditions and about the increasing hesitancy they are seeing among potential home buyers," Crowe said in a statement. "It also reflects the frustration that builders are feeling regarding the effects that foreclosed property sales are having on the new-homes market, with 87% of respondents reporting that their market has been negatively impacted by foreclosures."

Still, Crowe said the NAHB continues to expect improving housing market conditions in the second half of 2010, compared to the first half. Modest job growth, historically low mortgage rates, and pent-up demand will ensure a better housing market in the second half of the year, he said.

Earlier Gains Were Tax-Credit Dependent

Although not as telling as housing starts and new/existing home sales data, economists and market analysts still monitor the NAHB index because of the information on builder sentiment it provides. Essentially, it offers a window into the perception and confidence levels of builders -- clues that have predicted the direction of activity in the housing sector.

August's homebuilder confidence report confirms a housing sector that's moving sideways at best, if not retrenching. Investors can now add falling this measure to rising inventories of new homes and existing homes to the housing sector's concerns. Taken together, the metrics, which have reversed roughly in sync with the end of the homebuyers tax credit, indicate that a considerable fraction of home sales and builder activity was dependent on the credit, and that employment gains and low mortgage rates haven't bee enough to extend the housing sector's recovery.

Absent substantial job growth, a tax credit renewal or some other stimulus, the U.S. housing sector is likley to remain sluggish in the quarters ahead.

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Housing Buiklding in the midwest died there are no new homes being built and the thousands of new homes that were built are sitting empty. In the chicago burbs houses built 3 years ago started listing at over 400000 are now listed at $225000 as contractors go bankrupt. If you can get financed for a house now is a good time to buy though I personal;ly see homes for sale that were 285000 going for $100000 but construction is dead and it seems to be nationwide both for union workers and non union workers like myself. Bulletin boards once for only us non union guys are jamed with union workers looking for work

August 17 2010 at 12:34 PM Report abuse rate up rate down Reply

I don't know. I think building a brand new home right now, considering the overall housing market, economy and the current loss in property values homeowners are dealing with. Building new, would be rather a risky investment.

I for one would not be happy laying out several hundred's of thousands of dollars, going in to debt for 30 years. Only to find out, the brand new house I just built could end up actually decreasing in value.

August 17 2010 at 10:44 AM Report abuse +1 rate up rate down Reply

I just love these headlines. If anyone doesn't know we are in an economic crisis, they must be from a different planet. One problem that has been our problem for quite sometimes is the unemployment rate, that are caused by greedy corporation that initiate quick fixes instead of a slow but steady trend upward. With unemployment you have a healthcare problem. If you are unemployed do you pay for healthcare or pay your mortgage? Let's face it, unemployment benefits but it certainly doesn't cover all the esentials, so something has to give, which then in turn causes a doino affect. I am one of the unemployed, but I am actively working work..but let me tell ya I am not about to take a job that pays me not even half of what I made before. Coporations want to get greedy, why can't the work force?

August 17 2010 at 10:31 AM Report abuse -1 rate up rate down Reply

These builders knew from the very start, that they were overbuilding. Greed took over and now the chickens have come home to roost. This is actually funny because these greedy builders knew that they were duping the American home buyer. They purposely used Mexicans to build these cheap cookie cutter homes because of the cheap labor, they overpriced theses cheap crappy homes and made gazillions. Now they're crying. If you don't believe that the home you bought was overpriced, look at your closing settlement statement and take a look at what the builder made. After that pull out your property tax bill and look at the assess value of your the real world of real estate that's what that crap of a house you own is really worth. Still don't believe me. Call a Realtor and tell them to do a CMA on your home..better yet, try selling it for what you think it is worth. It will sit on the market until the real estate sign starts to decompose. What's even more funnier is the fact that the Mexicans built all this crap and now that the housing market has crashed, white folks want to kick each and everyone of them out because NOW they're illegal. Before the housing crash, they were Jesus, Mannie, and they're you want to change the Constitution. Give me a break and go kick rocks..Big Hypocrites. This is payback for being greedy, stupid and trying to play God over everyone.

August 17 2010 at 9:41 AM Report abuse +3 rate up rate down Reply

Please remove my e-mail address from your records. Thank you.

August 17 2010 at 9:06 AM Report abuse -1 rate up rate down Reply

The Main Problems that Builders are having is that they Built themselves out of a job. In States like Florida and Califorina, Developers and Builders Actualy Bribed Local and State Governments to let them Build on Pristine Wildlife Preserves and Productive Farmlands Over the Will of Local Residents who Opposed them. They Built their Particle Board Crap, that is still there rotting away and Unsold, based Only on Speculation and Not Actual Individual Orders. It is Time For Local Residents who Oppose this type of business in their areas to Attend All Local Development Hearings and Make your Voices Heard Loud and Clear and Follow up with Investigating Any County Comissioner Suspected of Taking a Bribe from Builders. Only then will Local Residents have the Upper hand. It is Time to Stop All Construction based on mere Speculation and build on a Pre Order Basis Only. Only then will we Solve the Problem that took down the housing industry and prevent another Economic Collapse

August 17 2010 at 9:03 AM Report abuse +6 rate up rate down Reply

Who can be confident with Obama as the president and a Democrat congress! These frigging losers killed off a great and thriving economy.

August 17 2010 at 8:26 AM Report abuse +7 rate up rate down Reply
1 reply to john's comment
Carl A. Johnson

Here in Michigan, we are entering our tenth consecutive year of downward recession conditions. Most homes are selling for about half of what they sold for a few years ago. We also have thousands of professional engineers with master's degrees in engineering out of work and out on the streets for two or three years ongoing. What a mess.......

August 17 2010 at 8:15 AM Report abuse +5 rate up rate down Reply
Frank S. Pedigo

Builders are mostly upset because illegals are going home due to the lack of jobs .Now they have to hire skilled American workers at a living wage . The jobs are coming back but very slowly unlike the Republican partys wants you to believe . Big businesses and banks are just finding out that they cant hold the country hostage much longer . Buildings need to be built or repaired and people need to have jobs to buy products still setting on shelves .
The biggest shame is the only true way to get things going faster is to buy American made products but Americans wont because we only buy by name not origin .Last weekend I went to buy a pair of jeans and couldnt find any made in America even levis were made in Vietnam so I didnt buy any .However there were Americans with arm loads of imported items and bitching about nothing made in America . Didn`t anyone think if you dont buy crap that these stores would have to start buying American.

August 17 2010 at 7:28 AM Report abuse +2 rate up rate down Reply


August 17 2010 at 7:25 AM Report abuse -9 rate up rate down Reply
1 reply to lwoolies's comment

I never got any money to buy a car, house or anything else. Why shold our taxes pay for cars and houses for people who dont have a down payment or do not save for there future. $10,000 dollars for everyone, My first house was a starter and we sleep on a mattress until we could afford a bed. Folding chairs and used furniture. Goverment stop the arts, cricket research and all the other unneeded things we spend billions on.

August 17 2010 at 8:04 AM Report abuse +11 rate up rate down Reply