According to a survey tabulated in early October by the National Association of Home Builders’ (NAHB), Washington, D.C., its Housing Market Index (HMI) recently dropped eight points—from 56 to 48.

“Like the rest of the economy, the housing market is clearly showing the effects of the September 11 attack on America,” said NAHB President Bruce Smith, a home builder from Walnut Creek, Calif. “In a supplement to the monthly survey, 56% of the builders polled said that new home sales had declined in the wake of the terrorist attacks. The primary reasons that they cited were lower consumer confidence, a weaker economy and job market, and the declining stock market.”

Nevertheless, Smith said NAHB remains confident that the housing market will stabilize in the first part of next year following a modest decline in the third and fourth quarters of 2001, and that housing is strategically positioned to play a major role in the nation’s economic recovery.

“Compared to other sectors of the economy, housing is holding up relatively well in the face of unprecedented conditions,” said Smith.

For nearly two decades, NAHB has released the HMI based on a monthly survey of builders. Home builders are asked to rate current sales of single-family homes and sales expectations for the next six months as “good,” “fair,” or “poor.” They are also asked to rate traffic of prospective buyers as either “high to very high,” “average,” or “low to very low.” The association uses these scores for responses to each component to calculate a seasonally adjusted overall index, where any number over 50 indicates that more builders view sales conditions as good.

In October’s HMI, the indexes gauging current single-family home sales, sales expectations for the next six months, and traffic of prospective buyers all declined from the previous month. Current sales dropped from 62 to 53, and expectations for sales over the next six months dropped from 61 to 55. Traffic of prospective buyers declined from 39 to 34.