U.S. homebuilders' confidence hits new low

Homebuilders' confidence in a near-term U.S. housing recovery sank to a new all-time low this month, reflecting growing worries over the financial crisis, rising unemployment and weakening consumer confidence, an industry trade association said Tuesday.

The National Association of Home Builders/Wells Fargo housing market index, which began in January 1985, tumbled five points to nine in November. The index stood at 14 in October and 17 in September.

Index readings higher than 50 indicate positive sentiment about the market. But the index has drifted below 50 since May 2006 and below 20 since April this year.

"Today's report shows that we are in a crisis situation," NAHB chairman Sandy Dunn said in a statement. "Tremendous economic uncertainties have driven consumers from the housing market, and it's going to take some major incentives to bring them back."

Homebuilders have been pressuring Congress to take steps that go beyond trying to reduce foreclosures.

They're asking for a 10 per cent tax credit of up to $22,000 US for people who buy a home in the next year and a temporary interest rate reduction on 30-year mortgages as incentives to lure people back into the market.

"The housing downturn has already cost America three million jobs in construction and related industries, and this downward momentum cannot be stemmed without substantive government intervention," said David Crowe, the association's chief economist.

Deutsche Bank North America analyst Nishu Sood concluded in a research note that the builders' proposals would cost the government $270 billion US and would only be a short-term fix at best.

With files from the Associated Press