American construction confidence at record low

By Bob Willis  |   2008-10-18  |     NEWSPAPER EDITION

Confidence among United States home builders has slid in October to the lowest level since record-keeping began in 1985, a sign the crisis in credit markets may deepen the worst housing recession in a generation.

The National Association of Home Builders/Wells Fargo index of builder confidence decreased to 14, less than September's forecast of 17, the Washington-based associat1ion said on Thursday.

A reading less than 50 means most respondents view conditions as poor, Bloomberg News reported.

The meltdown in worldwide financial markets that has clogged credit and sent US stocks plunging is likely to worsen the economic slump. Home sales and construction will probably keep dropping as access to loans is restricted, weighing on growth well into 2009.

"Tight credit standards, rising unemployment and the potential for further home-price declines will continue to dampen housing demand and the still-significant housing inventory overhang will continue to weigh on construction activity," Stephen Stanley, chief US economist at RBS Greenwich Capital Markets in Greenwich, Connecticut, said before the report.

The builder confidence index was forecast to fall to 17 this month from an originally reported reading of 18 for September, according to the median estimate of 41 economists surveyed by Bloomberg News. Projections ranged from 15 to 20.

Thursday's negative construction report "reflects builders' assessments of the recent events on WallStreet, the rapid deterioration in job markets and the corresponding weakness in consumer confidence," NAHB chief economist David Seiders said in the statement.