As Upton Sinclair is believed to have said,
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
And today's almost record-breaking surge in homebuilder sentiment (to its highest since June 1999) perhaps highlights Sinclair's comment best of all...
New Home Sales are still 47% below their peak in 2005 and the buying climate for homes (based on UMich's sentiment survey) has collapsed to its weakest since 2008 (all despite mortgage rates at or near record lows)
The National Association of Home Builders/Wells Fargo Housing Market Index jumped 5 points to 76, the biggest monthly increase since the end of 2017, and the November figure was revised higher.
The NAHB’s gauge of the traffic of prospective buyers climbed 4 points to 58, matching the highest level since 1998.
The index of current sales surged by 7 points to 84, the best reading since 1999.
The December reading caps a 20-point gain for the index this year, the biggest since 2012.
“While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability,” Robert Dietz, NAHB’s chief economist, said in a statement.
“Higher development costs are hurting affordability.”
The traffic of prospective buyers component was dominated by a surge in the Midwest (+15pt to 73) and followed by the South (+2pt to 77). But, the Northeast (-6pt to 58) and West (-2pt to 83) regional indexes declined.
Will new home sales, construction, and buying climate ever catch up to the optimism of those who make their livings based on all of this magical thinking?
Bonus Chart: Stocks ain't buying the enthusiasm either...