Confidence among U.S. homebuilders fell this month to the lowest level in 16 years, signaling the housing market continues to tumble.
The National Association of Home Builders/Wells Fargo sentiment index declined to 24 this month, the lowest since January 1991, from 28 in June, the Washington-based association said today. Readings less than 50 mean most respondents view conditions as poor.
Builders are pulling back on construction of new homes as inventories remain high as sales haven't recovered. Housing probably will be a drag on economic growth the rest of this year, economists said.
``Higher inventory levels would suggest that builders are going to have slow down their activity,'' said Jeffrey Roach, chief economist at Horizon Investments in Charlotte, North Carolina, before the report. ``We still expect to see, for the next couple of months, building being a drag on economic growth.''
This should surprise no one. Consider the following recent housing news.
M/I Home warns on earnings
M/I Homes Inc. warned investors Thursday to expect as much as $75 million in charges to snag its second quarter results.
M/I Homes said it expects to record up to $70 million in pretax asset impairment charges and write-offs related to its homebuilding assets and investments. Another $5 million charge will come from writing off intangible assets related to the 2005 acquisition of Orlando, Fla.-based Shamrock Homes.
Realtors forecast weak housing market into 2008:
he slump in home sales and prices will be deeper and last longer than previously expected, according to the latest forecast Wednesday by the National Association of Realtors.
The trade group is now looking for flat prices for existing homes in the first quarter of 2008 compared to the first quarter of 2007, and a more year-over-year declines for new home.
DR Horton sales down:
The traditional spring home-selling season was a bust for D.R. Horton Inc., one of the biggest nationwide homebuilders. Horton said Tuesday it will post a loss from operations for its latest quarter after net orders fell 40 percent and it wrote down the value of unsold houses.
Ryland expects loss:
Luxury homebuilder Ryland Group Inc. said Tuesday its expects to post a second-quarter loss as a result of the continued slump in the housing market.
According to preliminary figures, Ryland expects to report a loss of $1.25 to $1.35 per share for the quarter.
The news has been uniformly bad. Considering that inventories are at inter-generational highs, credit is tightening and the subprime financing market is experiencing problems, there is no reason to expect this trend to reverse anytime soon.