Thursday May 15, 06:16 PM
Builders remain pessimistic about housing market
WASHINGTON (AP) - A reading of U.S. homebuilders' sentiment scraped bottom in May, coming in just one point above its lowest level ever as anxiety continued to grip the industry.
The National Association of Home Builders said
Thursday its housing market index came in at 19 this month, after holding steady at 20 from February through April.
It was the second-lowest reading for the index, which goes back to 1985. The record low of 18 was set last December.
May's reading for the index had been expected to rise to 21, according to the consensus forecast of Wall Street economists surveyed by Thomson (Paris: FR0000184533 - news) /IFR.
The index is derived from a survey of about 400 residential developers nationwide. It gauges builders' perceptions of current conditions, interest from potential buyers and expectations for home sales over the next six months. Index readings higher than 50 indicate positive sentiment.
The index hasn't broken the 20-point mark since last September. It's been below 50 since May 2006.
Tighter lending standards, rising defaults and fear about the housing market's future have sidelined buyers, an absence felt acutely by homebuilders such as D.R. Horton Inc., Pulte Homes Inc (NYSE: PHM - news) . and Centex Corp.
Confidence fell across the country, expect in the West, where confidence rose three points and has been trending upward since January.
The segment of the index that tracks current sales conditions dropped to its lowest-ever level, while expectations of sales for the next six months and traffic from prospective buyers also dropped.
Despite numerous efforts by the Federal Reserve to shore up the housing sector 'the housing market has shown no evidence of improvement thus far,' the group's chief economist, David Seiders, said in a statement. 'Conditions have continued to deteriorate.'
The trade group has been urging Congress to put a tax credit for home buyers in a housing package. The credit, Seiders said, is the brake needed to 'halt the housing downswing and remove the heavy drag' of housing on the economy.
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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