Housing Industry Continues To Sour
Home builders' business outlook plunged this month to the lowest level since record keeping began more than 20 years ago, reflecting worsening industry conditions as the housing slump, rising gas prices and sagging consumer confidence combine to undermine the sales of new homes.
The National Association of Home Builders/Wells Fargo housing market index fell in July to a record low of 16, down from 18 in June, the Washington trade group said Wednesday.
The index has been on a downward trajectory since May as the industry's fortunes have soured.
Tighter lending standards, rising mortgage defaults and fear about the housing market's future have sidelined buyers, stinging major builders like D.R. Horton Inc., Pulte Homes Inc. and Centex Corp.
"Builders are reporting that traffic of prospective buyers has fallen off substantially in recent months," David Seiders, NAHB's chief economist, said in a statement.
On a vacant lot in northern New Jersey, Dean Mon is breaking ground for a 70-unit housing complex. But he tells CBS News correspondent Anthony Mason that he is worried he will be able to find buyers.
That's why builders like Mon are begging Washington to pass the housing bill.
"We need Congress's help," Mon says.
To stimulate sales, the bill would provide a temporary tax credit of up to $8,000 for first-time buyers and allow the government to insure $300 billion in new mortgages to help 400,000 strapped homeowners, Mason reports.
Sales of new homes fell 2.5 percent in May, while home prices were down 5.7 percent from a year earlier, the Commerce Department said last month.
Meanwhile, Southern California home prices plunged 29.3 percent in June compared to a year ago, according to DataQuick Information Systems. DataQuick said the median price for new and resale homes and condominiums stood at $355,000 last month in a six-county region, down from $502,000 in June 2007.
The latest home builder report reflects a survey of almost 400 residential developers nationwide, tracking builders' perceptions of current market conditions and expectations for home sales over the next six months.
Index readings higher than 50 indicate positive sentiment about the market. The seasonally adjusted index has been below 50 since May 2006.
Respondents gave dour assessments of current sales, prospective home buyer traffic and sales expectations in the months ahead, sending the index for each to new lows.
Builders' business outlook for the South, West and Midwest worsened, but improved slightly in the Northeast.
Meanwhile, the NAHB seized on Wednesday's data to renew its calls for lawmakers to include an $8,000 tax credit for first-time home buyers in a housing stimulus package being considered in Congress.
The association contends that would help stabilize the faltering housing market.
Despite the grim housing outlook, Federal Reserve Chairman Ben Bernanke told Congress Wednesday that troubled mortgage giants Fannie Mae and Freddie Mac are in "no danger of failing."
Though Bernanke delivered the same somber economic report to the House as he did Tuesday to the Senate, he tried to tamp down growing panic by stressing that like all economic downturns, this too shall pass, reports CBS News correspondent Bob Fuss.
The Fed chief made his remarks to the House Financial Services Committee, his second day on Capitol Hill where he briefed lawmakers on the problems plaguing the economy.
