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NAHB Builder Confidence Drops To June 2009 Levels, Winter Snowfall Blamed As Usual

Tyler Durden's picture


And so the snow scapegoating continues, now in the NAHB/Wells Fargo Builder Confidence index, which blamed the February confidence decline on "unusually poor weather conditions" i.e., snow in the middle of winter. The index, which came out at 15, was a drop from 17 in February, and is now back to June 2009 levels. More ominously the spread between hope and reality, or the 1-family Sale Present Time component and the Next 6 Months components, dropped to 9, matching the tightest level over the past year, even as the Prospective Buyer Traffic component dropped from 12 to 10, or the lowest reading since March of 2009. Do we really need any more confirmation that even with all the governmental stimulus bells and whistles, housing has relapsed into the second leg of the depression.

Full text from the NAHB press release:

Builder confidence in the market for newly built, single-family homes fell back two points to 15 in March as poor weather conditions and distressed property sales posed increasing challenges to both builders and buyers, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

"Unusually poor weather conditions certainly had a negative effect on builders' business in February," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "At the same time, the continual flow of distressed properties priced below the cost of production is having an adverse effect on new-home appraisals and also making it tough for builders' customers to sell their existing homes."

"The lack of available credit for new projects, the large number of distressed properties for sale and the continuing hesitancy of potential buyers due to the weak job market are definitely weighing on builder confidence at this time," said NAHB Chief Economist David Crowe. "That said, the inventory of new homes on the market is at an extremely low level, and we do expect a 25 percent improvement in new-home construction in 2010 over 2009 to rebuild inventory and meet expected pent-up demand."

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.In declining two points to 15 this March, the HMI returned to where it was in January 2010, losing the ground it had gained in the intervening month. Each of the HMI's component indexes fell in March; the component gauging current sales conditions declined two points to 15, while the component gauging sales expectations in the next six months declined three points to 24 and the component gauging traffic of prospective buyers declined two points to 10.

Regionally, the HMI results were mixed in March. While the Northeast posted a five-point gain to 23 and the West posted a one-point gain to 15, the Midwest HMI slid three points to 10 and the South HMI edged down one point to 18.


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Mon, 03/15/2010 - 13:22 | Link to Comment Hephasteus
Hephasteus's picture

My local news just had 15 minutes of glowing reports about the economy this morning so I thought it was time to get on zero hedge and see what is really going on. I also watched Brown stick his nose up the IMF's butt last night so it's getting close to the part where the computer calls you and asks if you would like to play a game.

Mon, 03/15/2010 - 13:52 | Link to Comment Postal
Postal's picture

CNBC was cheerleading the decrease in CC defaults. Do those people have any connection to the real world at all?

Mon, 03/15/2010 - 13:30 | Link to Comment DaveyJones
DaveyJones's picture

In three months maybe they can blame mosquitoes in summer.

Mon, 03/15/2010 - 13:42 | Link to Comment percolator
percolator's picture

good one!

Mon, 03/15/2010 - 13:32 | Link to Comment 10044
10044's picture

Why the fk are they building?? Where's the fking deman?? ARE THEY INSANE?

Mon, 03/15/2010 - 13:53 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

1) Where ever the Ponzi tells them to build

2) That's to be figured out later. For now, just build and shut the fuck up.

3) Yes, very much so but what does that have to do with the price of office space in China?


Mon, 03/15/2010 - 14:11 | Link to Comment DaveyJones
DaveyJones's picture

we "built it all the same, just to show them"

Mon, 03/15/2010 - 13:34 | Link to Comment trav7777
trav7777's picture

"What is too many fucking houses, Alex?"

Mon, 03/15/2010 - 13:40 | Link to Comment Racer
Racer's picture

And when the demand is still down, it will be down to the weather because it will be too hot/snowy/sunny/hurricaney/monsooney/dry/wet/rainy/sunspotty

and then it can be they couldn't find directions because of the reversal of the magnetic polarity... that will be a great one as it is way overdue!


Mon, 03/15/2010 - 13:44 | Link to Comment Miles Kendig
Miles Kendig's picture

Regionally, the HMI results were mixed in March. While the Northeast posted a five-point gain to 23..

+5 in the NE.  All those winter storms sure had a powerful effect on the numbers.  ROFLMAO

Mon, 03/15/2010 - 14:05 | Link to Comment Onehunglow
Onehunglow's picture

I thought the same thing. Overall most people do not bother to look past the headlines. Present company excluded of course ;)

Mon, 03/15/2010 - 13:46 | Link to Comment doublethink
doublethink's picture


"housing has relapsed into the second leg of the depression."


About time we started calling a spade a spade. But can someone come up with a phrase other than "Great Depression 2.0"?


Mon, 03/15/2010 - 14:21 | Link to Comment Racer
Racer's picture

The Great Repression (of truth)

Mon, 03/15/2010 - 14:22 | Link to Comment HelluvaEngineer
HelluvaEngineer's picture

How about "Great Suppression"?

Mon, 03/15/2010 - 14:24 | Link to Comment Sancho Ponzi
Sancho Ponzi's picture

How about "The Great Redistribution"

Mon, 03/15/2010 - 14:25 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"housing has relapsed into the second leg of the depression."

Clearly Rick Santelli's 12 step program of financial reform didn't work. Probably because no one was listening. Let's try 13 steps this time. :>)

Mon, 03/15/2010 - 13:52 | Link to Comment carbonmutant
carbonmutant's picture

Everybody is looking for cash buyers. CNBC this morning was testifying about RE opportunities for investors.

Additional taxes may be required.


Mon, 03/15/2010 - 14:04 | Link to Comment AR15AU
AR15AU's picture

Couldn't help but notice that CNBC aired its "American Greed" show over the weekend.  This weeks focus was a "notorious SHORT SELLER"... mwahaha...  they are already putting in motion the steps to demonize those who profit from the comming collapse of the stock market..

Mon, 03/15/2010 - 14:08 | Link to Comment crosey
crosey's picture

I'm GUILTY then!  Is this like Minority Report where they will come get me before I make money?

Mon, 03/15/2010 - 14:28 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"Couldn't help but notice that CNBC aired its "American Greed" show over the weekend.  This weeks focus was a "notorious SHORT SELLER"..."

In the psychological warfare alternative reality world, this is called "predictive programming".

Mon, 03/15/2010 - 15:32 | Link to Comment carbonmutant
carbonmutant's picture

Yea, I gotta a prediction for ya...

Mon, 03/15/2010 - 14:00 | Link to Comment crosey
crosey's picture

It's easier to blame the snow and weather, than to acknowledge what's really happening, and how fearful builders really are.  I live in one of the better, stable markets...we rarely enjoy big spikes, or big drops...and there is growing dark space here.  My friend is a commercial broker.  It's bad, real bad.  No green shoots on the horizon.

There is no way that QE II, III, or IV is going to cure this.  This is a necessary correction.

Mon, 03/15/2010 - 14:00 | Link to Comment SteveNYC
SteveNYC's picture

Honesty, I love it! Welcome friend.

Mon, 03/15/2010 - 14:05 | Link to Comment crosey
crosey's picture

Thanks bro'.

I'm reminded of the 5 stages of crisis management:






I think that we're (we meaning the mass-consciousness) still farting around in Denial.  I'd like to see us in Acceptance, and moving forward with a new approach.

Mon, 03/15/2010 - 14:44 | Link to Comment Sancho Ponzi
Sancho Ponzi's picture

As long as they can control government policy, financial entities can actually thrive during periods of quantitative easing. 

As long as the Fed is there to buy up your toxic MBS and CRE crap at 100 cents/dollar, there's no downside. Keep interest rates effectively at zero, and anyone can make money. When the spread is fat, why invest in silly SMB's and lend to over-leveraged consumers when you can invest in treasuries risk-free? When everyone is chasing anything with any semblance of return on investment, how can you lose in the equity market? QE2, QE3...QE12, bring it on!

Mon, 03/15/2010 - 14:01 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I got some oceanfront property in AZ.....

Mon, 03/15/2010 - 14:20 | Link to Comment Gimp
Gimp's picture

If they are still using the "snow" excuse in June I am going "American Psycho" and putting on the plastic raincoat!

Mon, 03/15/2010 - 14:23 | Link to Comment HarryWanger
HarryWanger's picture

My brother-in-law is one of the top CRE builders in the country. Based in SF. He sold his firm two years ago to start another. Made a fortune. Unfortunately, he's working 18 hr days to try and make this new venture work. Hasn't drawn a penny from the company since its inception and is ready to fold up shop in June if things don't improve. That's what's really happening out there in the CRE world.

Mon, 03/15/2010 - 14:38 | Link to Comment crosey
crosey's picture

Why wait until June?

Mon, 03/15/2010 - 15:38 | Link to Comment Gimp
Gimp's picture

You're right, I am wearing it now and dragging the axe across the floor.

Mon, 03/15/2010 - 15:39 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Generally, you need a construction loan ready to fund in order to start building.

Next topic..........

Mon, 03/15/2010 - 15:40 | Link to Comment Rick64
Rick64's picture

Damn snow.

Mon, 03/15/2010 - 16:06 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

There's still hope we get snow for Easter.

Mon, 03/15/2010 - 15:54 | Link to Comment RSDallas
RSDallas's picture

In Dallas, Texas we are seeing fast & furiouse sales pace in the price point of $250,000.00 and below.  This is clearly tied to the $8,000.00 Government program. Luke warm sales pace from 250,000.00 to say $350,000.00.  Weak sales from $350,000 to $500,000.00 and very weak sales from $500,000 to $1,000,000.00 and horrible sales rates for anything over $1,000,000.00.  Prices are still coming down on everything, especially on C, D & F ranked properties.  Foreclosures on new construction from $750,000.00 & up has increased in the last 60 days. 

Mon, 03/15/2010 - 15:59 | Link to Comment carbonmutant
carbonmutant's picture

 That's a refreshing change from last fall.

Mon, 03/15/2010 - 16:26 | Link to Comment RSDallas
RSDallas's picture

Well, just guessing, I wouldn't think it's much different here in Texas than most other States (with the exception of Florida, Nevada, Arizona & California).  The problem is that the entry level market is the only market really selling anything & that's definitely being influenced by the Govt. program.  So what happens after that program ends?  There in lies the first real test to residential real estate.  My guess is that the bottom falls out of the floor for even the low priced markets. 

Tue, 03/16/2010 - 00:37 | Link to Comment jdrose1985
jdrose1985's picture

My mother is looking at buying a ranch near Waco, TX and is quite unhappy to learn that although RE prices have dropped by about 40% in her area of Ohio they have not fallen anything like that around Waco.

So, I'm just guessing from that and also from the fact that you guys in TX do still have a decent economy left, Dallas RE is probably not a great indicator of what's going on in the rest of the country.

But then again, who the hell am I to say?

Wed, 04/14/2010 - 09:48 | Link to Comment mark456
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