The National Association of Home Builders said Monday its housing market index, which gauges builders' perceptions of conditions and expectations for home sales over the next six months, came in at 19 in December. The number was at the lowest level since the index began in January 1985.
Index readings higher than 50 indicate positive sentiment. The seasonally adjusted index has been below 50 since May 2006, and declined for eight straight months this year, and has been unchanged since October.
Tighter lending standards, rising defaults among borrowers with weak credit and a sense of worry about the housing market's future have meant fewer buyers for hard-hit homebuilders such as D.R. Horton Inc., Pulte Homes Inc. and Centex Corp.
Many builders are "bracing themselves for the winter months when home buying traditionally slows, scaling down their inventories and repositioning themselves for the time when market conditions can support an upswing in building activity," David Seiders, the trade group's chief economist said in a statement.
That's likely to occur, he said, by the second half of next year.
Confidence dropped in the northeast, but inched up in the Midwest and South. It remained unchanged in western states.
Nationwide, new-home sales are projected to fall to 788,000 this year, down 25 percent from 1.05 million last year, the National Association of Realtors said last week. Sales are expected to drop further to 693,000 in 2008, according to the Realtors' group.
Most economists expect the housing slump to continue through 2008 as more homeowners face higher payments and fall into default. Some economists also worry the housing downturn could drag the U.S. economy into recession.
Homebuilders were mixed in Monday's trading, D.R. Horton added 23 cents to $13.54, while Pulte declined 22 cents, or 2.1 percent, to $10.11. and Toll Brothers Inc. edged down 12 cents to $20.68.