NEW YORK — A key gauge of home builders’ confidence sank to a new low this month, as the deepening U.S. recession and rising unemployment erode chances for a housing turnaround.
The National Association of Home Builders/Wells Fargo housing market index released Wednesday dropped one point to a record 8 in January. The index was at 9 for the previous two months.
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 accelerated in the wake of the U.S. financial crisis, slipping three points in October and then five points in November.
“Clearly, conditions in the nation’s housing market aren’t getting any better,” NAHB Chairman Sandy Dunn said in a statement, “and they aren’t going to get any better until the federal government takes substantial action to encourage qualified buyers to get back in the market.”
Homebuilders are pushing Congress for a 10 percent tax credit of up to $22,000 for homebuyers that purchase a home over the next year. They are also asking for a temporary interest-rate reduction on 30-year mortgages.
On Tuesday, a panel of housing experts projected that builders’ woes will deepen this year, pushing the prospect of a recovery into 2010 at the earliest.
“We do expect ‘09 to be the down year, to be the bottom,” David Crowe, chief economist for the National Association of Home Builders, said during a news conference at the International Builders’ Show, which runs through Friday.
The latest builder index reflects a survey of 419 residential developers nationwide, tracking builders’ perceptions of market conditions.
The builders’ gauge of current sales conditions fell two points to six, while expectations for sales over the next six months inched up a point to 17, the NAHB said.
The index of foot traffic by prospective buyers also rose one point to eight.
Regionally, builder confidence declined the most in the West, falling three points to a new record low of four in January.
In the Northeast, it fell one point to 10 and held steady at six in Midwest. The index rose one point to 11 in the South.
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