Home builders' confidence tanks in October
Market Watch
By Rex Nutting, MarketWatch
Last update: 1:22 p.m. EDT Oct. 16, 2008

WASHINGTON (MarketWatch) -- The doom and gloom mood in the U.S. home-building industry worsened in October as "profound uncertainties" about credit availability sent the home builders' sentiment index down to a record low, an industry trade group reported Thursday.

The National Association of Home Builders/Wells Fargo index fell three points to 14 in October, two points below the previous low, NAHB said. The survey has been conducted monthly for 23 years.

"Not surprisingly, builder confidence has taken a heavy hit from the recent financial market crisis," said Sandy Dunn, president of the NAHB and a builder from Point Pleasant, W. Va.

The index "reflects builder assessment of recent events on Wall Street, the rapid deterioration in job markets and the corresponding weakness in consumer confidence," said David Seiders, chief economist for the builders' group.

The builders called for another stimulus program from Congress "including a substantial incentive to spur home buying."

The index has been highly correlated with data on housing starts, which are due out on Friday. Economists surveyed by MarketWatch are forecasting that starts fell about 3% in September to a seasonally adjusted annual rate of 870,000, down 62% from the peak in early 2006.

At 14, the index shows that only about one out of seven builders thinks the market is good.

The index is based on a survey of about 450 builders who asked for their view of the market. All three subcomponents declined in October. The index measuring current sales fell three points to a record-low 14. The index for expected sales fell nine points to a record-low 19. The index of buyers' traffic fell two points to 12, matching the record low.

The builders' index fell in all four regions of the country. Sentiment fell by four points in the Northeast to 17, fell by one point in the Midwest to 14, fell by four points in the South to a record-low 16 and fell by three points in the West to 10, matching the record low. End of Story

Rex Nutting is Washington bureau chief of MarketWatch.

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