Interest Rate Roundup

Thursday, May 15, 2008

NAHB index dips in May

We just got a look at the latest National Association of Home Builders survey. Here's what the May numbers looked like ...

* The overall index slipped to 19 this month from 20 in April. Economists were expecting an unchanged reading. The cycle low (so far) was 18 in December.

* The sub-index measuring current home sales fell 1 point to 17, a fresh cycle low. The sub-index measuring expectations about future sales dropped 3 points to 27. And the sub-index measuring prospective buyer traffic slumped 2 points to 17.

* Regionally, we saw declines in three of four tracked areas. The index fell 4 points to 18 in the Northeast, 3 points to 12 in the Midwest, and 2 points to 22 in the South. The index climbed 3 points to 20 in the West.

If you're looking for positive housing news, you're not going to find it in today's report. NAHB figures show the housing market continues to struggle, with builder confidence broadly slumping and buyer traffic cooling. The causes are well-documented: Tighter lending standards, rising unemployment, and a lack of confidence among potential home buyers.

That said, lower home prices are starting to work their magic in select locales. They are enticing some bargain hunters off the sidelines, and helping us chip away at the mountain of inventory for sale. It will take quite some time for supply and demand to come back in line. But at least it's a start.


  • Any ideas on why with the mounting evidence of a dark and cloudy future in the NAHB data that the sector stocks seem to rally on the news? It seems counter intuitve, but then again this is the stock market. Thanks

    By Anonymous Anonymous, at May 15, 2008 at 5:15 PM  

  • "That said, lower home prices are starting to work their magic in select locales."

    I can confirm this is happening in the Washington, DC area. For the past two months, home sales in Prince William County, an outer suburb, have gone up by 20-40% from last year's depressed levels. Prices in Prince William have rolled back to 2001-2002 levels in many cases.

    In the inner suburbs and Washington, DC where prices have dropped only slightly, home sales are down around 40% for the first three months of the year. There are relatively few buyers who can afford a home at the elevated prices under more conservative underwriting standards.

    When home values come down, the buyers return.

    By Anonymous Anonymous, at May 15, 2008 at 7:37 PM  

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