NAHB Housing Index Continues To Fall

Washington, DC, Jan. 21, 2009--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.

Housing will not look much better at the end of this year than it does now, but "we do expect '09 will be the bottom," the chief economist for the National Association of Home Builders said Tuesday.

David Crowe, speaking at the International Builders Show on Tuesday, said housing starts are expected to fall nearly another 30% in 2009 and new-home sales will drop 14%. But he said he expects the trough of the market to occur sometime in the middle of the year.

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.

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.