"Builder confidence has waned even further as economic growth has stalled, foreclosures have continued to hit the market and the cost of building a home has risen," NAHB Chief Economist David Crowe said today in a statement. "Economic growth must pick up in order for housing to gain the momentum it needs to get back on track."
A report from the Labor Department today showed that the cost of living in the U.S. rose more than forecast in May, reflecting higher prices for everything from autos to hotel rooms and signaling raw-material expenses are filtering through to other goods and services.
Consumer Prices
The consumer-price index increased 0.2 percent, compared with the 0.1 percent median forecast of economists surveyed by Bloomberg. The so-called core measure, which excludes more volatile food and energy costs, climbed 0.3 percent, the biggest increase since July 2008.
The NAHB confidence survey asks builders to characterize current sales as "good," "fair" or "poor" and to gauge prospective buyers' traffic. It also asks participants to gauge the outlook for the next six months.
Builders in three of the four regions saw a decrease in confidence this month. The biggest drop was among those in the West, where sentiment fell to the lowest level since December. Confidence in the Midwest declined to the lowest since March 2010, and sentiment in the South fell to a nine-month low.
Confidence rose in the Northeast.
The Commerce Department may report tomorrow that housing starts rose 4.2 percent in May to 545,000 units at an annual rate, according to economists' forecasts. Starts have moved up from a 518,000 level in February, which was the lowest since a 478,000 pace in April 2009, the weakest on record.
Home Sales
Sales of existing homes, which make up more than 90 percent of the market, fell 4 percent to a 4.85 million annual pace in May, economists surveyed by Bloomberg forecast the National Association of Realtors may report on June 21. Existing home sales have been gaining market share from new homes due to growing demand for lower-priced distressed homes.
Firms like Hovnanian Enterprises Inc. are still struggling to turn a profit in the U.S. housing market. The largest homebuilder in New Jersey reported a net loss for the three months ended April 30 that was wider than analysts estimated.