Washington Homebuilder confidence dropped for the third straight month in August as the struggling economy and a flood of cheap foreclosed properties kept people from buying new homes.
The National Association of Home Builders said its monthly index of builders’ sentiment about the housing market fell to 13, the lowest reading since March 2009. The index is adjusted for seasonal factors.
Readings below 50 indicate negative sentiment about the market. The last time the index was above 50 was in April 2006.
Fewer people are buying new homes, even though prices have stabilized in the past year and those who have good credit can qualify for the lowest mortgage rates in decades. The market is struggling because jobs are scarce and credit is tight. And many analysts predict home prices are likely to drop again in the fall.
“Buyers just aren’t stepping up to the plate,” wrote Mike Larson, real estate analyst with Weiss Research. “Unless and until the job market improves, we are simply not going to get any traction in the housing market.”
Another key reading of housing activity will come today when the Commerce Department releases its report on home construction in July. Construction plunged in June to the lowest level since October.
Builders say consumers are worried about the weak recovery and job market. Among those who are buying, many are opting for deeply discounted foreclosed properties. The industry had received a boost in the spring when the federal government offered tax credits of up to $8,000. But those expired in April and the market has struggled since.
“Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren’t gaining any traction,” said Bob Jones, a builder from Bloomfield Hills, Mich. and the trade group’s chairman.
Other notable business news:
• Stocks managed to break a four-day losing streak Monday by the slimmest of margins. Investors had no change of heart about the economy, however, and again poured money into the safety of U.S. Treasurys.
The Dow Jones industrial average fluctuated along with the other big market indexes throughout the day. The Dow closed down just over a point, but the other indexes had slight gains.
• Banks have eased lending standards for small businesses for the first time in nearly four years, the Federal Reserve said Monday.
In its new survey of bank lending practices, the Fed found that the loosening of loan standards was occurring primarily at the country’s largest domestic banks.
Banks had been reporting relaxed credit standards for big corporations. But the new survey marked the first indication that credit was beginning to ease for smaller companies.