Builder Confidence Continues To Erode

Concerns about rising interest rates and housing affordability continue to negatively impact the confidence level of the nation's home builders, which declined for the sixth consecutive month in July, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

The seasonally adjusted HMI stands at 39 this month, down three points from June and down 31 points from a year ago. An HMI above 50 indicates that more builders view sales conditions as good versus poor.

All three HMI components decreased in July. The component measuring sales expectations declined five points to 46, while the components gauging current single-family sales and buyer traffic decreased to 43 and 27, respectively.

In the West, where builders have been the most optimistic in recent months, builder confidence declined nine points to a seasonally adjusted HMI of 51.

**Taken from the California Association of Realtors Bulletin, dated July 20, 2006.