(Bloomberg News) Confidence among U.S. homebuilders slumped in June to the lowest level in nine months as executives turned more pessimistic on the outlook for sales, a sign that any pickup will take time to develop.
The National Association of Home Builders/Wells Fargo sentiment index unexpectedly fell to 13 from 16 in May, the biggest drop in a year, data from the Washington-based group showed today. The median forecast of economists surveyed by Bloomberg News projected it would hold at 16.
Further declines in real-estate values and more foreclosures in the pipeline mean builders will be hesitant to break ground on projects. Unemployment at 9.1 percent suggests demand for new homes may take years to rebound.
"There is still an abundance of existing homes for sale," David Semmens, a U.S. economist at Standard Chartered Bank in New York, said before the report. "Homebuilding is not going to make a meaningful addition to the U.S. economy any time soon."
Other reports today showed factory production rebounded in May and consumer prices rose more than forecast. Figures from the Federal Reserve Bank of New York showed manufacturing in its region unexpectedly shrank in June.
Readings lower than 50 in today's homebuilder measure mean more respondents said conditions were poor. Projections among the 42 economists surveyed ranged from 15 to 18.
The gauge, which was first published in January 1985, reached a record low of 8 in January 2009, and averaged 54 in the five years before the recession began in December 2007.
The builders group's index of sales expectations for the next six months decreased to 15, matching the lowest level on record, from 19. A gauge of current single-family home sales declined to 13, the lowest since September, from 15.
The index of buyer traffic fell to 12 from 14 in May, the biggest one-month drop since July.