Interest Rate Roundup

Thursday, October 16, 2008

Home builder sentiment drops to record low

The NAHB just released its latest Housing Market Index report. The news was dismal, as the following details show:

* The overall index dropped to 14 in October from 17 in September. That was well below the reading of 17 that economists were expecting and the worst in the history of the index, which dates back to 1985

* The subindex for current single family home sales dropped to 14 from 17 ... the subindex that measures expectations about future sales plunged to 19 from 28 ... and the subindex measuring buyer traffic slipped to 12 from 14.

* Regionally, the index fell to 17 from 21 in the Northeast, slipped to 14 from 15 in the Midwest, dropped to 16 from 20 in the South, and slumped to 10 from 13 in the West.

Forget April. October has been the cruelest month for the housing industry. The latest NAHB report showed widespread deterioration in market conditions, with all three subindices falling and all four regional sentiment indicators slumping.

The readings aren't exactly a surprise, given what we know about credit market and economic conditions. But they are nonetheless a sobering reminder of the challenges facing the U.S. housing market. They also underscore my belief that a lasting recovery in construction activity, sales, and home prices remains well over the horizon.


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