Interest Rate Roundup

Tuesday, February 17, 2009

NAHB index ticks up in February as "tire kickers" step in

The National Association of Home Builders released its latest Housing Market Index survey this afternoon. Here's what the report showed ...

* The overall index ticked up 1 point to 9 in February. January's reading of 8 was a record low for the series, which dates back to 1985. A year ago, the index stood at 20.

* The subindex that measures current single-family sales rose to 7 from 6, while the subindex measuring expectations about future sales dropped to 15 (a record low) from 17. The subindex that measures prospective buyer traffic climbed to 11 from 8, its highest reading since October.

* Regionally, the index dipped 1 point to 9 in the Northeast. But it rose 2 points to 8 in the Midwest, inched up 1 point to 12 in the South, and climbed 1 point to 5 in the West.

It looks like a few more "tire kickers" were active in the housing market in February. I say that because buyer traffic climbed to the highest level since October, according to the NAHB, but actual sales barely budged.

Clearly, housing affordability is on the rise thanks to a combination of lower home prices and relatively cheap mortgage rates. But getting a buyer to put pen to paper is extremely difficult in this environment. Americans are concerned -- rightfully so -- about losing their jobs. They're also hesitant to buy a house now because they're afraid it will be worth less six months or a year later. Before we see a true, lasting turnaround in housing demand, we'll need to see some stabilization in the employment situation and a restoration of buyer confidence. And unfortunately, that doesn't seem to be forthcoming any time soon.


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