Builders unexpectedly turned pessimistic in August, a sign the expiration of a government tax credit will keep depressing home construction.
The National Association of Home Builders/Wells Fargo confidence index dropped to 13 this month, the lowest level since March 2009, from 14 in July, data the trade group released Monday indicated. Economists forecast a reading of 15, according to the median estimate in a Bloomberg News survey.
Readings lower than 50 mean that more respondents said conditions were poor.
"Builders are reluctant to start new projects despite inventories of unsold new homes being at their lowest level on record," Steven Wood, president of Insight Economics LLC in Danville, Calif., said before the report came out. "Without a homebuyers' tax credit to boost sales of new homes, housing sales are having to find their fundamentally determined level, which appears to be quite low."
Projections in the Bloomberg survey of 44 economists ranged from 13 to 17. The gauge, which was first published in January 1985, averaged 15 last year.
The group's index of current single-family home sales fell to 14 in August from 15. The gauge of buyer traffic held at 10. A measure of sales expectations for the next six months fell to 18, the lowest since March 2009, from 21.
"Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren't gaining any traction," NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich., said in a press release Monday.
The confidence survey asks builders to characterize current sales as "good," "fair" or "poor" and to gauge prospective buyers' traffic. It also asks participants to assess the outlook for the next six months.