Washington – An index that tracks developers’ expectations of future home sales fell this month to equal its record low, signaling that the housing market’s weakness could persist into early 2008.
The National Association of Home Builders said Tuesday its housing-market index, which tracks builders’ perceptions of current market conditions and expectations for home sales over the next six months, fell two points to 20 in September.
The drop, which matched the consensus forecast of economists surveyed by Thomson/ IFR, was the seventh straight monthly decline and the same reading as in January 1991 – during the last housing slump.
Index readings higher than 50 indicate positive sentiment about the market. The seasonally adjusted index has been below 50 since May 2006 and has fallen every month since March.
Executives of the nation’s largest homebuilders, speaking at an industry conference in New York, gave a similarly gloomy picture.
“We’re operating as though these conditions will continue for a long time,” said Ara Hovnanian, chief executive of Red Bank, N.J.-based Hovnanian Enterprises Inc. Hovnanian and Beazer Homes USA Inc. on Tuesday said they are lowering prices to weather the downturn.
In the trade group’s report, declining builder confidence was seen in all parts of the country. The index was lowest in the Midwest and highest in the Northeast.
Delinquencies among borrowers with weak, or sub prime, credit have risen drastically over the past year, causing lenders to cut back on mortgages to them.
