Homebuilders' Confidence Locked in the Basement

The slackened demand for new homes has kept the National Association of Home Builders monthly index of builders' sentiment unchanged in September at 13 (numbers below 50 connote a negative outlook). For the second consecutive month, the index has remained at an 18-month low. The index is composed of foot traffic from potential buyers, an estimate of future sales, and current sales figures. Contributing factors include high unemployment, sluggish job growth and stricter credit requirements, which have discouraged people from purchasing homes. A depressed summer, with an increase in foreclosures and a sharp decline in sales of both new and existing homes, has created a vicious circle: Slow sales of new homes means fewer jobs in the construction business, a key booster in economic recoveries.