NAHB index holds at record low in August

The National Association of Home Builders just released its housing market index for August. Bottom line: The summer doldrums continue. Here are the details ...

* The group's overall index held at 16 for a second month. This is a record low for the index, which dates back to 1985.

* The sub-index measuring present home sales ticked up to 16 from 15. The sub-index measuring expectations about future sales rose to 25 from 23. Meanwhile, the sub-index measuring prospective buyer traffic was unchanged at 12.

* Regionally, the index rose to 16 from 14 in the Northeast and climbed to 14 from 10 in the Midwest. It held steady at 20 in the South and fell to 11 from 14 in the West.

Congress has passed a major housing stimulus bill. The Treasury Department has made its implicit support of Fannie Mae and Freddie Mac explicit. And the sudden, sharp decline in things like gasoline prices has given consumers a welcome break. That may be helping confidence stabilize a bit in the housing sector.

But credit market headwinds remain significant. More lenders than ever before are tightening standards on home mortgages. The spread between mortgage rates and Treasury yields is ballooning, keeping loan costs elevated. Plus, the broad economy remains mired in weakness, with seven straight months of job losses. All of this suggests that any recovery in the housing market and construction activity should be less vigorous and more drawn out than in the past.