The National Association of Home Builders just released its most recent monthly builder sentiment index. So what did the numbers look like?
* The overall NAHB index dropped 2 points to 20 in September. That matched economists' forecasts. It also ties the all-time low of 20 in January 1991 (for perspective's sake, the cycle peak for this measure was 72 in June 2005)
* Two out of three sub-indices declined. The index tracking present single-family home sales dropped to 20 from 22 in August. And the index tracking estimates of future SFH sales fell to 26 from 31. Meanwhile, the index measuring prospective buyer traffic held steady at 16.
* Regionally, buyer traffic declined in all four areas -- the Northeast (-3 points), Midwest (-1), South (-2), and West (-4).
These figures aren't much of a surprise given the mortgage market turmoil we've been seeing. It has become harder to obtain home financing, and more recently, job growth has deteriorated. The end result is weaker housing market conditions. Builders are starting to respond to these troubled times by holding "fire sales," like Hovnanian's recent "Deal of the Century" program. Those price cuts will eventually succeed in bringing inventory levels down, but it's going to take a long time given the magnitude of the supply glut.