September 19, 2011 (Jeff Alan)

Confidence among the nation’s new single-family home builders dipped slightly in September according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) as economic challenges continue to keep potential home buyers away.

The HMI is derived from a survey that NAHB has been conducting for over 20 years. The index gauges builder perceptions of current single family home sales and sales expectations for the next six months as “good, fair, or poor.” Builders are also asked to rate traffic of prospective buyers as “high to very high, average or low to very low.” Each component is then used to calculate a seasonally adjusted index where a score over 50 indicates builder’s view sales conditions as good.

The HMI dipped one point from 15 in August to 14 in September.

All three components that make up the HMI declined from the previous month. The component gauging sales expectations over the next six months, which had declined 2 points last month, also slipped another two points to a level of 17 in September.

The component gauging current sales conditions declined from 16 last month to14 in September and the component gauging traffic of prospective buyers declined two points from last month to11 in September.

Regionally, the Midwest was the only region to post a gain in the HMI increasing one point to 11, the South declined two points to 15, while the West dropped three points to 12. The Northeast also posted a two point decline, bringing its HMI score to 15 for the month.

“Very little has changed in terms of housing market conditions so far this year,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nevada. “Builders continue to confront the same challenges in accessing construction credit, obtaining accurate appraisal values for new homes, and competing against foreclosed properties that they have seen for some time. Beyond this, both builder and consumer confidence took a hit in recent weeks with the market disruptions caused by the S&P downgrade and congressional gridlock on the budget deficit.”

Tags: NAHB, Wells Fargo, Housing Market Index, HMI, homebuilders, sales expectations, builder confidence, single-family homes, competition, distressed properties, appraisals