NAHB Builder Confidence Drops Again, Misses Expectations, Back To April 2009 Levels
Today's National Association of Home
Builders/Wells Fargo Housing Market Index update for July was yet another confirmation of the deterioration in the economic sentiment, and the US consumer's unwillingness to spend on homes absent tax rebates and other forms of stimulus, regardless of mortgage rates. The index came at 14, below expectations of a 16 reading, and a drop from downward revised 16 in June (prior 17). Ben Shalom is looking at all these deteriorating data points and getting closer to QE2 by the hour.
The chart says it all:
From the press release:
Builder confidence in the market for newly built, single-family homes
declined for a second consecutive month in July to its lowest level
since April of 2009, according to the National Association of Home
Builders/Wells Fargo Housing Market Index (HMI) released today. The HMI
fell two points from a downwardly revised number in the previous month
to 14 for July.
"We continue to see a lull in home buying activity
following the expiration of the federal home buyer tax credit program,
as many of the sales that would have occurred this summer were likely
pulled forward to meet that program's deadline," noted NAHB Chairman Bob
Jones, a home builder from Bloomfield Hills, Mich. "In addition,
builders are reporting continuing consumer hesitancy regarding home
purchases due to uncertainty in the overall economy and job markets."
month's lower HMI reflects a number of underlying market conditions
that builders are seeing, including hesitant home buyers, tight consumer
credit, and continuing competition from foreclosed and distressed
properties that are priced below the cost of construction," said NAHB
Chief Economist David Crowe. "The pause in sales following expiration of
the home buyer tax credits is turning out to be longer than anticipated
due to the sluggish pace of improvement in the rest of the economy.
That said, we do believe that favorable factors such as low mortgage
rates, affordable prices, and demographic trends will help revive
consumer demand for new homes this year, and that new-home sales will
improve by 10 percent in 2010 from 2009."
Derived from a monthly
survey that NAHB has been conducting for more than 20 years, the
NAHB/Wells Fargo Housing Market Index gauges builder perceptions of
current single-family home sales and sales expectations for the next six
months as "good," "fair" or "poor." The survey also asks builders to
rate traffic of prospective buyers as "high to very high," "average" or
"low to very low." Scores for each component are then used to calculate a
seasonally adjusted index where any number over 50 indicates that more
builders view conditions as good than poor.
Each of the HMI's
component indexes recorded declines in July. The component gauging
current sales conditions fell two points to 15, while the component
gauging sales expectations in the next six months edged down one point
to 21 and the component gauging traffic of prospective buyers fell three
points to 10.
Regionally, the HMI results were mixed in July. The
Northeast, which has a smaller survey sample and therefore is prone to
greater monthly volatility, posted a seven-point increase to 23 this
month, while the Midwest posted a one-point improvement to 15. The South
and West each posted five-point declines to 14 and 9, respectively.