Builders' confidence matches record low

A survey of homebuilders' assessment of the housing market shows the industry's sentiment tied the mark set in December.

Sales volume will continue to erode in the months ahead and hurt the general economy, according to David Seiders, chief economist of the National Association of Home Builders.

"Obviously, this isn't terribly encouraging," Seiders said. "Housing still occupies a major place in the slowdown process ... putting pressure on GDP growth and the labor market."

The NAHB/Wells Fargo housing market index for June fell 1 point to a seasonally adjusted reading of 18, down from May's reading of 19. Economists surveyed by Thomson/IFR expected the index to rise to a reading of 20.

A reading below 50 indicates that more builders think home sales conditions are poor than those who think the environment is positive for sales. June's reading ties the record low level reached in December 2007.

Builders were asked for their view of the current market, the number of buyers looking at homes and expectations for six months from now.

Only 5% of the builders surveyed believe the current market is favorable, down from 6% in May. Of the more than 300 homebuilders surveyed, 70% view the market as poor, up from 69% in the previous month.

"These numbers aren't surprising ," said Wachovia economist Adam York. "We may be in one of the worst housing markets in 1985, and starts can continue to fall for another few months."