Homebuilder confidence sinks for 3rd month

WASHINGTON - Homebuilder confidence dropped for the third-straight month in August as the struggling economy and a flood of cheap foreclosed properties kept people from buying new homes.

The National Association of Home Builders said its monthly index of builders' sentiment about the housing market fell to 13, the lowest reading since March 2009. The index is adjusted for seasonal factors.

Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.

Fewer people are buying new homes, even though prices have stabilized in the past year and those who have good credit can qualify for the lowest mortgage rates in decades. The market is struggling because jobs are scarce and credit is tight. And many analysts predict home prices are likely to drop again in the fall.

"Buyers just aren't stepping up to the plate," wrote Mike Larson, real-estate analyst with Weiss Research. "Unless and until the job market improves, we are simply not going to get any traction in the housing market."

Another key reading of housing activity will come today when the Commerce Department releases its report on home construction in July. Construction plunged in June to the lowest level since October. The survey suggests the market will be sluggish the rest of the year.

The building industry has sharply scaled back construction after the housing-market bubble burst. The number of new homes up for sale in June fell 1.4 percent from a month earlier to 210,000, the lowest level in nearly 42 years.

by Alan Zibel - Aug. 17, 2010 12:00 AM



Homebuilder confidence sinks for 3rd month