U.S. homebuilder sentiment held at a record low for a third consecutive month in December, weighed down by problems in the mortgage market and a huge supply of unsold houses, an industry group said Monday.
The National Association of Home Builders said its preliminary NAHB/Wells Fargo Housing Market Index was unchanged at 19 in December, remaining at its lowest reading since the gauge started in January 1985.
"The low reading confirms that the problems in the housing sector continue and there is not yet light at the end of the housing tunnel," said Torsten Slok, senior economist at Deutsche Bank in New York.
"For things to improve we need to see some stabilization in the level of inventories but we are not there yet," Slok said.
The December index was in line with expectations based on a Reuters survey of economists.
Readings below 50 indicate more builders view market conditions as poor than favorable.
"Builders continue to look for signs of improvement in the ongoing mortgage market crisis that is weighing on housing and the overall economy," NAHB President Brian Catalde, a home builder from El Segundo, California, said in a statement.
The NAHB's other index components were sharply below where they stood in February, when they reached this year's peaks.
The gauge of current single-family homes sales rose to 19 from 18, compared with 33 a year ago and 40 in February. The index of sales expected in the next six months rose to 26 from 24, down from 49 a year earlier and from 53 in February. The prospective-buyer traffic measure declined to 14 from 17, below 23 a year ago and the 2007 high of 29 set in February.
"Today's report shows that builders' views of housing market conditions haven't changed in the past several months, and there clearly are signs of stabilization in the HMI," NAHB Chief Economist David Seiders, said in a statement.
Builders at this point are preparing themselves for the winter months, which is traditionally a slow time for home buying. They are trimming their inventories and positioning for the time when market conditions can support an upswing in building activity, which will most probably be in the second half of next year, he said.
On a regional basis, the Midwest and South each posted 2-point gains in their housing market indexes, to 15 and 21, respectively. The West held even at 18, and the Northeast, which experienced wetter weather conditions than normal in the survey period, posted a 7-point decline to 19. All regions were down on a year-over-year basis, the group said.
Tighter lending standards are fueling the unwieldy supply of homes for sale. It has become increasingly difficult for prospective buyers to obtain a home loan and that is having an impact on home sales.
The National Association of Realtors last month said U.S. existing home sales fell 1.2 percent in October to a record low 4.97 million-unit pace.
The Commerce Department last month said sales of new single-family U.S. homes rose 1.7 percent in October to an annual rate of 728,000.
On Tuesday, investors will get more insight into the hard-hit U.S. housing market when the Commerce Department releases November data on housing starts and building permits.
A Reuters survey forecasts November housing starts fell to 1.18 million units from 1.229 million units in October.
Building permits are seen dropping to a 1.15 million unit pace from a 1.170 million unit level in October.