Builders’ confidence in the market for new single-family homes dropped again in July, as the National Association of Home Builders’ housing market index — a monthly gauge of builder sentiment — slipped to 16 from 18 in June, the group announced yesterday.

The reading is a record low, as all three indexes also hit record lows in July. IFR Markets’ poll of economists predicted a level of 18.

“Builders are reporting that traffic of prospective buyers has fallen off substantially in recent months,” noted NAHB chief economist David Seiders. “Given the systematic deterioration of job markets, rising energy costs, and sinking home values aggravated by the rising tide of foreclosures, many prospective buyers have simply returned to the sidelines until conditions improve.”

“An $8,000 tax credit, made available for a limited time, could be just the incentive needed to draw them into the game, and a policy-induced pickup in home sales could gain momentum further down the line,” Seiders added.

The three component indexes declined in July. The current single-family home sales index slid to 16 from 17, the sales expectations index for the next six months dropped to 23 from 27, and the traffic of prospective buyers index dropped to 12 from 16.

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