Homebuilder sentiment index falls in July

The National Association of Home Builders/Wells Fargo housing market index fell in July to a record low of 16, down from 18 in June, the Washington trade group said Wednesday.

The index has been on a downward trajectory since May as the industry's fortunes have soured.

Tighter lending standards, rising mortgage defaults and fear about the housing market's future have sidelined buyers, stinging major builders like D.R. Horton Inc., Pulte Homes Inc. and Centex Corp.

"Builders are reporting that traffic of prospective buyers has fallen off substantially in recent months," David Seiders, NAHB's chief economist, said in a statement.

Sales of new homes fell 2.5 percent in May, while home prices were down 5.7 percent from a year earlier, the Commerce Department said last month.

The latest home builder report reflects a survey of almost 400 residential developers nationwide, tracking builders' perceptions of current market conditions and expectations for home sales over the next six months.

Index readings higher than 50 indicate positive sentiment about the market. The seasonally adjusted index has been below 50 since May 2006.

Respondents gave dour assessments of current sales, prospective home buyer traffic and sales expectations in the months ahead, sending the index for each to new lows.

Builders' business outlook for the South, West and Midwest worsened, but improved slightly in the Northeast.