Builder Confidence Declines in June

HMI and New Single-Family Starts. Each of the HMI's component indexes recorded declines in June. The component gauging current sales conditions fell five points to 17, while the component gauging sales expectations for the next six months declined four points to 23 (from a one-point downward revised index level of 27 in May) and the component gauging traffic of prospective buyers fell two points to 14. Courtesy of National Association of Home Builders/Wells Fargo Housing Market Index

Snapping a string of two consecutive monthly gains, builder confidence in the market for newly built, single-family homes fell back to February levels. This was prior to the beginning of the home buyer tax credit-related surge. National Association of Home Builders/Wells Fargo Housing Market Index (HMI) dropped five points to 17 in June.

''The home buyer tax credit did its job in stoking spring sales and we expected a temporary pull back in the builders' outlook after the credit expired at the end of April,'' said NAHB Chairman Bob Jones. ''However, the reduction in consumer activity may have been more dramatic than some builders had anticipated, which resulted in their lower confidence levels.''

NAHB Chief Economist David Crowe expected some softening in the market following the expiration of the home buyer tax credit. In the coming months, an improving economy, rising employment, low mortgage rates and stabilizing home values should help the housing market move forward.

HMI data shows that builders still remain cautious and are aware that several factors could impede the nascent housing recovery. This includes serious problems in obtaining financing for the production of housing, faulty appraisal practices and competition from short sales and foreclosed properties.

- Courtesy of NAHB