Builder Confidence Drops in September

Washington, DC, September 18, 2007--Concerns about the substantial inventory of new homes for sale and the effects that deepening mortgage market problems are having on buyer demand caused builder confidence to decline for a seventh consecutive month in September, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

The HMI dropped two points to 20, tying its record low reached in January of 1991 (the series began in January 1985).

“Builders are expressing concern that home buyers are getting spooked by the many headlines they are seeing on mortgage market issues and their continuing effects on the housing market and home prices,” said NAHB President Brian Catalde, a home builder from El Segundo, Calif.

“Indications are that consumers are trying to time the bottom of the market before making their purchase, which historically can be a very tricky thing to do and is typically not an advisable strategy. The bottom line is, with the inventory situation what it is and the selection of units and deals to be had, now is a very good time to buy a home.”

Problems across the mortgage finance arena are taking their toll on buyer demand, which is weighing heavily on builder confidence measures, said NAHB Chief Economist David Seiders.

But he said availability of mortgages under the government-supported part of the market remains good, and the long-term fundamentals of housing are solid in terms of projected household formations, income growth and other factors. He now expect to see home sales begin moving up by the second quarter of 2008 and housing starts to begin a gradual recovery process by the third quarter of next year.