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According to the National Association of Home Builders (NAHB), builder confidence fell in August two points to 22, compared with a level of 24 last month, its lowest level since January 1991. Scores from three component indexes are used to calculate the seasonally adjusted index, where any number over 50 indicates that more builders view sales conditions as good than poor.
Builders are responding by trimming prices and stepping up non-price incentives to sell homes in a difficult market, a statement from the NAHB said.
“Builders realize that issues related to mortgage credit cost and availability have become more acute, filtering some prospective buyers out of the market and prompting others to delay their decision to purchase a new home,” said NAHB president Brian Catalde.
Three out of four regions of the country reported declines in the index in July -- the South’s reading remained unchanged at 25. The West recorded a one-point decline to 23, the Northeast posted a two-point decline to 30 and the Midwest reported a five-point decline to 14.
Home prices also dropped for the fourth straight quarter, according to the National Association of Realtors (NAR). The median single-family home price was $223,800 during the second quarter, down 1.5 percent from last year. Condo prices rose 1 percent to $226,800.
Prices are off 1.7 percent from their peak of $227,600, recorded during the third quarter of 2005. The biggest year-over-year decline on record of 2.7 percent came in the fourth quarter of 2006.
NAR senior economist Lawrence Yun said the results were "encouraging."
"Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming-out in the fourth quarter of 2006," he said. "Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets."
In individual metropolitan areas, prices showed strength in Salt Lake City, up 21.9 percent to $233,100; and in Salem, Ore., up 16.7 percent to $227,900.
Price plunged in Elmira, N.Y., down 17.9 percent to $71,700; in Palm Bay, Fla., down 15 percent to $183,300; and in Davenport, Iowa, down 11.3 percent to $103,300.