Builder Confidence Declines for Seventh Consecutive Month

Increased sales cancellations, rising home inventories, and high energy costs continue to lower the confidence level of the nation's home builders, which declined for the seventh consecutive month in August, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

The seasonally adjusted HMI stands at 32 this month, down seven points from July and down 35 points from a year ago. The HMI has not been below 40 for two consecutive months since December 1991. An HMI below 50 indicates more builders view sales conditions as poor versus good.

All three HMI components decreased this month. The component measuring current single-family sales declined seven points to 36, while the components gauging sales expectations and buyer traffic decreased to 40 and 21, respectively.

Builder confidence declined throughout the country in August. The HMI in the West fell 10 points to 42.

**Taken from the California Association of Realtors Bulletin, dated August 17th, 2006.