Reuters
Homebuilder sentiment at 16-year low: NAHB
Tuesday July 17, 1:20 pm ET

NEW YORK (Reuters) - Homebuilder sentiment slid in July to its lowest since January 1991 as fallout from the housing slump and sub prime mortgage crisis caused a glut of new homes, the National Association of Home Builders said on Tuesday.

The NAHB/Wells Fargo Housing Market index fell to 24 from 28 in June, the group said in a statement. Economists polled by Reuters had thought it would slip to 27. Readings below 50 mean more builders view market conditions as poor than favorable.

"The bottom line is that the single-family housing market is still in a correction process following the historic and unsustainable highs of the 2003-2005 period," NAHB Chief Economist David Seiders said in the statement.

Homebuilders are struggling to unload excess inventories left to them as speculators abandon contracts and buyers find it harder to obtain mortgages. Soaring delinquencies on the riskiest loans have forced lenders to boost requirements for many borrowers, locking out customers who might previously have qualified, analysts said.

Subprime loans are made to borrowers with poor credit.

All components of the index also dipped to their lowest since January 1991, the NAHB said. Declines were seen in all four regions of the U.S., with the northeast and south registering the largest drops of five points.

The index of current single family home sales fell to 24 in July from 29 in June, while the measure of expected sales for the next six months slipped to 34 in July from 39 in June. The gauge of buyer traffic was 19 in July, down from 22 in June.