Builder confidence in June slid to its lowest level since February 1991 as concerns about subprime mortgage lending and rising prime mortgage rates soured the outlook for recovery, according to an industry index.

The National Association of Home Builders/Wells Fargo Housing Market Index, which measures builder perceptions and expectations for home sales for the next six months, dropped to 28 this month from a reading of 30 in May. An index rating above 50 indicates that more builders view sales conditions as good, while a rating below 50 indicates that more builders view conditions as poor.

“Builders continue to report serious impacts of tighter lending standards on current home sales as well as cancellations, and they continue to trim prices and offer a variety of nonprice incentives to work down sizeable inventory positions,” said NAHB President Brian Catalde in a prepared statement.

All three component indexes declined in June, as the index gauging current single-family sales slipped two points to 29; the index gauging sales expectations for the next six months fell two points to 39; and the index gauging traffic of prospective buyers fell one point to 21.
 
Three out of four U.S. regions posted declines in the HMI this month, with the Midwest down three points to 19, the South off one point to 32 and the West falling five points to 27. The Northeast, however, recorded a three-point gain to 35 following a six-point loss in May.

NAHB Chief Economist David Seiders said in a statement that “home sales most likely will erode somewhat further in the months ahead, and improvements in housing starts probably will not be recorded until early next year. As a result, we expect housing to exert a drag on economic growth during the balance of 2007.”

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Time is running out to secure your Connect Now tickets at the lowest price. Don't miss out on a chance to grow yourself and your business.Learn More×
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription