Builder confidence reaches record low

Monthly report shows home builders have an increasingly negative view of the housing market.

By Beth Braverman, CNNMoney.com contributing writer
Last Updated: July 16, 2008: 1:19 PM EDT

NEW YORK (CNNMoney.com) -- Home builder confidence fell for the third consecutive month, hitting a record low in July, a trade group reported Wednesday.

The National Association of Home Builders/Wells Fargo Housing Market Index fell 2 points in July to 16, marking the lowest point in the 20-year history of the index.

Wall Street economists surveyed by Thomson/IFR had expected the index to remain at 18.

A reading below 50 indicates that more builders think home sales conditions are poor than those who think the environment is positive for sales.

"The worsening housing slump and the near meltdown in financial markets last week makes it even more urgent for Congress to complete action on the housing bill now, a move that will help stabilize and restore confidence in housing and the U.S. economy," NAHB President Sandy Dunn said in a statement.

The group is backing a housing stimulus bill that would provide temporary tax credits of up to $8,000 for first-time home buyers. NAHB believes this would stimulate sales, reduce the inventory of unsold homes on the market, stabilize house prices and stem the deterioration of the mortgage market.

The index reflects the results of a survey that asks builders for their view of the market, including the number of buyers looking for homes and expectations for six months from now. Each of the survey's component indexes also fell to record lows in July.

The current sales index declined 1 point to 16; the number of buyers index fell 4 points to 12; and the sales expectations index dropped 4 points to 23.

Every region but the Northeast posted a decline in builder confidence in July. The Midwest fell 6 points to 10, its lowest score since the group began collecting regional data in December 2004. The West matched its record low in January 2008 with a 3-point drop to 13. The South declined 1 point to 20. The Northeast gained 2 points to 14.