| Builder Sentiment Reflects Poor Prospects |
| Written by Jonathan Smoke | |
| 07.18.2007 | |
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Discuss this article on the forums. (0 posts) Just when we thought builder confidence couldn’t get any lower in June, the NAHB/Wells Fargo Housing Market Index fell four more points to 24 in July. In its history since 1985, the only time it’s been slightly worse was the very end of 1990 leading into the very beginning of 1991. )) Click on chart for larger image Each month, NAHB surveys its member builders about their perceptions of current sales, what they expect sales to look like in the next six months, and how good/bad the traffic of prospective buyers looks to them. A value over 50 indicates more than half of the respondents view sales conditions as good.
 Read NAHB’s full statement or check out our Real Estate news for a recap from Inman.I’m not sure if it’s an accurate translation, but I would take a 24 to mean that three-quarters of the respondents feel that sales conditions are bad. Clearly each component of this index is a perception—it’s not based on actual traffic or sales or sales conversions. Nevertheless, it’s a telling indicator of what builders think about current sales prospects, and I mean that in both senses of the word. It’s thought by many to be a leading indicator of sales and future permits and starts. We will dig into how reliable it is as a leading indicator, but the last time the HMI set a record low, we were at the bottom of the last major housing recession. 
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