U.S. builder confidence in the market for new single-family homes remained unchanged in November due to continuing mortgage market problems, a substantial inventory overhang, and ongoing concerns about the effects of negative media coverage, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The November HMI held even with October's upwardly revised 19 reading, its lowest point since the series began in January of 1985.
"The message from today's report is that builders do not see any significant change in housing market conditions as compared to last month," said NAHB Chief Economist David Seiders. "While they continue to work down inventories of unsold homes and reposition themselves for the market's eventual recovery, they realize it will be some time before market conditions support an upswing in building activity - most likely by the second half of 2008."
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
In November, the index gauging current sales conditions for single-family homes remained flat at 18, while the index gauging sales expectations for the next six months declined a single point to 25. The index gauging traffic of prospective buyers rose two points to 17.