Confidence among U.S. homebuilders fell this month to the lowest since February 1991 as interest rates climbed and delinquencies surged.
The National Association of Home Builders/Wells Fargo index of sentiment declined to 28 this month from 30 in May, the Washington-based association said today. Readings below 50 mean most respondents view conditions as poor. Economists surveyed by Bloomberg News forecast the gauge to stay unchanged this month.
Homebuilders including Hovnanian Enterprises Inc. are losing money as they cut prices to stem a slide in sales amid stricter standards for getting mortgages. Builders have scaled back projects to work off bloated inventories, a sign housing construction will weigh on growth for the rest of the year, economists say.
``There will be continuing declines in home building through the second half'' of this year, said Robert Mellman, an economist at JPMorgan Chase Corp. in New York. ``If rates hadn't gone up, we would have expected it would have stabilized. We've put off the stabilization in housing until early next year.''
Any frankly, why should anyone in the housing market be bullish right now? Interest rates are increasing, foreclosures are increasing, inventory levels are at generational highs, consumers are in debt up to their eyeballs, credit standards are tightening ... I could go on, but I think you get the picture.