U.S. home builder sentiment was stuck at a record low in August, as stringent lending and a flood of foreclosed homes dragged on the real estate market, according to data from the National Association of Home Builders released Monday.
The NAHB/Wells Fargo Housing Market index held at 16 in August for a second straight month, the group said in a statement.
The August figure matched the median forecast among analysts surveyed by Reuters. Readings below 50 mean more builders view market conditions as poor than favorable.
Despite the weak reading, the Washington trade group said its members hope a recently enacted home buyer tax credit will bolster housing appetite.
"Builders are anticipating the stimulative effects of this legislation and are optimistic that the tax credit will give those buyers who've been sitting on the fence the reason they need to jump back into the market," NAHB President Sandy Dunn said in a statement.
This sliver of optimism was reflected in an improvement in two of the index's three components.
The sub-index on current single-family home sales ticked up to 16 in August from a downwardly revised record low of 15 in July, and the component on the six-month sales outlook rose to 25 from a record low of 23.
But the reading on traffic of prospective buyers was stuck at a record low of 12, NAHB said.
On July 30, the Housing and Economic Recovery Act was signed into law, which included a provision that gives a temporary $7,500 tax credit for first-time home buyers who meet certain income requirements.
Meanwhile, the performances of the four regional markets tracked by NAHB diverged in August. The Northeast and Midwest markets improved, while the Western market continued to slide.
The Southern market held steady at its depressed level.
An increase in foreclosed sales at discounts hurt the new homes market in the West, NAHB said.
Demand for new homes has also been crimped by heightened anxiety among consumers facing worsening job conditions and tough times in obtaining a mortgage to buy a home, analysts said.