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Homebuilder sinks to lowest since 1995 in { May 15 2006 } Original Source Link: (May no longer be active)
http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-05-15T171241Z_01_N15310622_RTRIDST_0_ECONOMY-HOUSING-UPDATE-1.XMLhttp://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-05-15T171241Z_01_N15310622_RTRIDST_0_ECONOMY-HOUSING-UPDATE-1.XML
UPDATE 1-U.S. homebuilder sentiment sinks in May - NAHB
Mon May 15, 2006 1:12 PM ET
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NEW YORK, May 15 (Reuters) - U.S. homebuilder sentiment slumped in May to its lowest since mid-1995 on rising mortgage rates, declining affordability and the retreat of speculators, the National Association of Home Builders said on Monday.
The NAHB/Wells Fargo Housing Market index fell six points to 45 in May from an upwardly revised 51 in April, the group said.
Economists polled by Reuters had predicted the index would drop to 49, which would have been the index's lowest level since a downturn immediately after the Sept. 11, 2001 attacks on the World Trade Center and Pentagon.
Readings above 50 mean more builders view market conditions as favorable than poor.
"Based on historical experience, particularly the 1994-1995 episode, the pattern of movement in the HMI is not inconsistent with the orderly cooling-down process we're projecting for home sales and single-family housing starts in 2006," NAHB chief economist David Seiders said in a statement.
The group predicts new home sales will slide 12 percent this year from record sales of 1.283 million units last year.
Building of single-family homes, "supported by large builder backlogs of unfilled orders and reconstruction in the wake of last year's record-breaking hurricane season, should be down by about 7 percent for the 2005 record," Seiders added.
Groundbreakings on new homes set an all-time annual high of 2.068 million units in 2005.
Builder confidence eroded in every region in May, the NAHB said.
Among regional readings, the Northeast declined three points to 47, two points in the Midwest to 30, six points in the South to 51 and eight points in the West to 61, the group said.
The overall index peaked at 72 in June 2005 but has trended downward since as mortgage rates climbed.
Average 30-year mortgages rates rose to 6.51 percent in April from 6.15 percent in January, according to Freddie Mac , the second largest U.S. home funding company. These same home loan rates averaged 5.72 percent in May 2005.
All three of the index's components -- current sales, sales expectations for the next six months, and traffic of prospective buyers -- slid in May.
The current sales and expectations measures each fell 5 points to 50 and 54, respectively, while the traffic gauge dropped seven points to 32.
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