Builder Confidence Edges Down Further; Starts Continue to Plummet

Concerns about the faltering economy and reluctant home buyers pushed builder confidence in the market for newly built single-family homes down further in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI edged down a single point to a new record low of 8 in January.

"Clearly, conditions in the nation's housing market aren't getting any better, and they aren't going to get any better until the federal government takes substantial action to encourage qualified buyers to get back in the market," says NAHB chairman Sandy Dunn, a home builder from Point Pleasant, W.Va. "The Obama Administration and the new Congress have a tremendous opportunity and responsibility to enact legislation that can spur home buyer demand and jump-start the national economy."

Specifically, NAHB is advocating for an enhanced home buyer tax credit and a government buy-down of mortgage rates for home purchases in 2009, moves that would rejuvenate demand for homes and trigger significant consumer spending across the board.

The association also announced that production of new single-family homes and permit issuance declined by double digits in December, falling to their lowest levels on record for the month, according to U.S. Commerce Department figures. In addition, total starts and single-family starts fell to record annual lows in 2008.

Total housing starts posted a 15.5 percent decline to 550,000 units in December, an all-time low. Meanwhile, starts of new single-family homes posted their eighth straight monthly decline, falling to an all-time low of 398,000 units. This was down 13.5 percent from the previous monthly low in November. Multifamily starts fell 20.4 percent in December to an annual rate of 152,000.

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