Homebuilders Index Worsens

The U.S. Homebuilders Index held steady at twenty - as many economists predicted - but a key component measuring expectations for new home sales over the next six months dropped even further during the month. The data indicates that many home builders remain deeply concerned about the future and have little confidence in a housing turnaround in the near term. Overall results indicate the homebuilders have a “poor” outlook on the market especially considering the sales condition for single-family homes and the traffic of possible homebuyers.

The National Association of Homebuilders, which published the report, also recommended that Congress enact a temporary home buyer tax credit, improve the regulatory framework around Fannie Mae and Freddie MAc, and modernize the Federal Housing Administration in order to help improve the mortgage market. Finally, the organization asked for more action on the part of the Federal Reserve when it meets tomorrow in order to encourage more homebuyers to make purchases.

The housing market has been struggling ever since a collapse in the subprime market pushed a record number of foreclosures on the market while lenders tightened their restrictions in order to curb bad loans. Unfortunately, the actions were taken too late and the carnage is continuing to pile up on Wall Street. The increasing number of foreclosures and lowering housing prices (which cause more foreclosures in a viscious cycle) promise to keep indexes like this low for many months to come.

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