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Homebuilders’ confidence in the housing market again plunged to a record low, dragged down by poor financial market conditions, rising unemployment and consumer anxiety, a trade group said Tuesday.

The National Association of Home Builders (NAHB)/Wells Fargo housing market index for November fell to a seasonally adjusted reading of 9, the lowest recorded level since the index began in 1985. Economists surveyed by Thomson/IFR expected the index to remain at 14, the previous record low set in October.

A reading below 50 indicates that builders who think home sales conditions are poor outnumber those who think the environment is positive for sales. November’s reading was the sixth record low set or matched in the past seven months.

“Today’s report shows that we are in a crisis situation,” said Sandy Dunn, NAHB chairman, 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.”

Builders were asked for their view of the current market, the number of buyers looking at homes and expectations for six months from now.

“This November data is downright atrocious,” said Mike Larson, analyst at Weiss Research. “If you’re looking for a glimmer of hope for the housing market, you aren’t going to find it in the latest figures.”

Larson said builder confidence deteriorated due to the double-punch of the credit crisis and economic downturn.

“Ultimately, it will take lower home prices, even less building activity, and an economic recovery to lay the groundwork for a lasting market rebound,” Larson said. “But that is in the future, not the present.”
Government intervention needed

As a result of a battered market, the Bush administration last week unveiled a new program to modify mortgages and stabilize the battered real estate market. But the plan stops short of providing direct government financial help to at-risk homeowners, something FDIC chairwoman Sheila Bair later said she supports.

David Crowe, chief economist for NAHB, said he supported even more government intervention, including raising the government’s $16 billion of tax credits, which were set at $7,500 per qualified buyer in July.

“Congress should consider significant consumer incentives such as expanding the first-time homebuyer tax credit and providing a government buydown of mortgage interest rates for home purchasers,” Crowe said.

Tuesday’s report came a day ahead of the government’s report on housing starts and building permits for October, which economists forecast will fall to a 60-year low. In September, housing starts hit a 17-year low.

Shares of homebuilders were mixed Tuesday. Pulte Homes (PHM, Fortune 500) rose 3% and Lennar Corp. (LEN, Fortune 500) gained 0.2%, but Centex Corp. (CTX, Fortune 500) D.R. Horton Inc. (DHI, Fortune 500) and Hovnanian (HOV, Fortune 500) all lost more than 1%. Radian Group (RDN) traded down nearly 8%.