US homebuilders see little or no improvement ahead

20 September 2010 18:53  [Source: ICIS news]

WASHINGTON (ICIS)--US homebuilders see little prospect of improvement in the nation’s long-depressed housing sector, an industry trade group said on Monday, with contractors’ confidence in September holding at a near-record low level.

The National Association of Home Builders (NAHB) said that its monthly survey of member contractors showed that builder confidence levels remained at 13 in September, unchanged from the August reading.

The survey, known as the housing market index (HMI), asks home builders to appraise the current state of the market for single-family home sales and their expectations for such sales over the next six months. 

The surveyed contractors also report on “traffic”, the number of prospective home buyers visiting their model homes or developments.

The housing market index is measured on a scale of 0 to 100.

The index hit an all-time low of 8 in January 2009, a significant and unprecedented decline from index numbers that held steady in the mid 60s and even reached 70 at times during the housing boom years of 2002-2005.

The US housing industry - especially construction of single-family homes - is a key downstream consuming sector for chemicals and resins.

According to the American Chemistry Council (ACC), each new single-family residence is said to account for some $16,000 (€12,320) in chemicals or derivative products such as plastic pipe, adhesives, insulation, roofing materials, synthetic fibres, paints, coatings and adhesives, among others.

The still-low confidence measure in September means that “builders haven’t seen any reason for improved optimism in market conditions over the past month”, said Bob Jones, NAHB chairman.

“If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential home buyers are more secure about the job market and economy,” Jones said.

Confidence among home builders had picked up a bit from the record low in January 2009 as the federal tax credit incentive for home buyers went into effect in the first quarter 2009 and continued into the first months of this year.

But while the index of builder confidence rose to 22 earlier this year, it fell again once the federal stimulus credits expired in April.

The Commerce Department reported last month that US sales of new, single-family homes fell in July to the lowest level ever recorded since the department began tracking sales of new one-family residential properties in 1963.

Despite the stimulus effort, “the stall in the nation’s housing market continues”, said NAHB chief economist David Crowe.

He said builders reported that continuing unease among consumers and the large number of foreclosed properties on the market are chilling new home construction.

However, Crowe said that “we do expect that moderate improvement in the job market will help boost consumer confidence and improve conditions for new home sales in this year’s final quarter.”

But the US Department of Labor (DOL) reported earlier this month that the nation’s unemployment rate rose in August, edging up to 9.6% from the 9.5% jobless rate that had held steady in June and July after declining from the 10.1% peak in October 2009.

($1 = €0.77)

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