Builders Pessimistic About Slumping Housing Market


A reading of U.S. homebuilders' sentiment remained unchanged in April, just shy of its record low for the third consecutive month as the housing market failed to recover.


The National Association of Home Builders said Tuesday its housing market index came in at 20 this month, the third-lowest reading on record.

The index, derived from a survey of about 400 residential developers nationwide, 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 has been at 20 or below since September, and 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

, Pulte Homes   and Centex .

Confidence rose slightly in the Northeast and West, but fell in the Midwest and South. Traffic from prospective buyers also remained unchanged, the trade group said.

The builders' group's chief economist, David Seiders, says the housing slump has pushed the economy into a "mild recession." The trade group has been pushing aggressively on Captiol Hill for legislation, such as a temporary tax credit for home buyers, arguing that doing so could stem the housing downturn.

"Measures that stimulate consumer confidence in the housing market, push the fence-sitters into the ring and put a floor under house prices can successfully halt the drag that housing is exerting on the national economy, and help stabilize financial markets at the same time," Seiders said in a statement.

Fitch Ratings said in a conference call Tuesday that the housing sector is likely to continue to contract throughout 2008, and could worsen further in 2009 if the economy slides into a sharp recession. The ratings agency said low mortgage rates, cheaper home prices and government proposals to aid the ailing industry will not be enough to spark a turnaround.

"Despite a few steps in the right direction, U.S. housing remains mired in a steep cyclical decline, with more pain likely for U.S. homebuilders through 2008," said Fitch homebuilding analyst Robert Curran.