“There’s no question that the market was losing some momentum,” said Bruce Smith, president of the National Association of Home Builders (NAHB). “The real question is where the housing market is headed in the aftermath of the recent terrorist attacks on America.”

In an effort to determine the immediate effects that the attacks have had on housing, NAHB recently conducted a telephone survey of 30 of the nation’s larger builders.

“The results of that survey were fairly reassuring,” Smith said. “The builders reported that sales were holding up, and they hadn’t seen an increase in contract cancellations. However, traffic in sales offices was off by about 10% to 20%. Builders also reported that they are scrutinizing their speculative building activity more closely, and some companies are extending their options to purchase lots by four to eight weeks.

“The market was flattening prior to the attack on America, and we had anticipated that it would weaken slightly in the fourth quarter,” Smith added. “However, in the wake of the recent attacks, we are expecting a somewhat greater decline in sales -- on the order of 5% -- in the fourth quarter.”

New home sales in August decreased 2.7% in the Northeast and 4.4% in the Midwest. Sales increased by 1.4% in the South and 3.5% in the West.