Homebuilder Confidence Falls Back in June

Washington, DC, June 16, 2009--Homebuilder confidence fell unexpectedly in June, indicating that a recovery from the housing slump could be slow to develop.

The National Association of Home Builders/Wells Fargo index of builder confidence decreased to 15 this month from 16 in May, the Washington-based NAHB said today. A reading below 50 means most respondents view conditions as poor.

Builders continue to report losses as foreclosures mount, worsening the glut of unsold properties and driving down prices at the same time that borrowing costs are rising. Still, other reports show demand is starting to stabilize, which may eventually help residential construction become less of a drag on the economy.

The builder confidence index was forecast to increase to 17 this month, according to the median estimate of 40 economists surveyed by Bloomberg News. Projections ranged from 15 to 20.

The index, which fell to a record low of 8 in January, averaged 16 in 2008. It was first published in January 1985.

The confidence survey asks builders to characterize current sales as “good,” “fair” or “poor” and to gauge prospective buyers’ traffic. It also asks participants to gauge the outlook for the next six months.

The builder group’s index of current single-family home sales held at 14 for a second month. The gauge of buyer traffic stayed at 13 for the third straight time. A measure of sales expectations for the next six months dropped to 26 from 27, the first decrease since February.

“The housing market continues to bump along trying to find a bottom,” David Crowe, chief economist at NAHB, said in a press release. “Builders are taking their cue from consumers, who remain uncertain about the economy and their own situation.”