WASHINGTON - The latest reading of U.S. home builders' sentiment remained at a record low for the third straight month.
The National Association of Home Builders said yesterday that its housing-market index, which gauges builders' perceptions of conditions and expectations for home sales over the next six months, came in at 19 in December. That level, the same as in October and November, is the lowest since the index began in January 1985.
An index reading of less than 50 indicates that more builders view sales conditions as poor than good. The seasonally adjusted index has been below 50 since May 2006 and declined for eight straight months this year until October.
Separately yesterday, Treasury Secretary Henry M. Paulson Jr. said he favored allowing Fannie Mae and Freddie Mac, the largest sources of finance for U.S. mortgages, to buy so-called jumbo loans, which exceed $417,000.
He said a proposal to permit that should be part of a package of legislative changes governing the two government-chartered companies.
Lawmakers including Democratic Sen. Charles Schumer of New York have called on the Office of Federal Housing Enterprise Oversight to ease the constraints on Freddie Mac and Fannie Mae, allowing them to buy more home loans and help mitigate the worst U.S. housing slump in more than 16 years. The two own or guarantee about 40 percent of the $11.5 trillion U.S. home-loan market.
Tighter lending standards, rising defaults among borrowers with weak credit and a sense of worry about the housing market's future have meant fewer buyers for hard-hit home builders such as D.R. Horton Inc., Pulte Homes Inc., Centex Corp., and Toll Bros. Inc.
Builders' confidence dropped in the Northeast, but inched up in the Midwest and South, the December survey showed. It remained unchanged in the West.