Interest Rate Roundup

Tuesday, November 17, 2009

NAHB index flat in November

The National Association of Home Builders just released its latest builder sentiment index. The reading came in at 17. That was unchanged from a downwardly revised 17 in October and slightly below the 19 number economists were expecting.

Among the sub-indices, the one measuring present single family sales was unchanged at 17. The prospective buyer traffic sub-index held at 13, while the sub-index measuring expectations about future sales rose to 28 from 26. Regionally speaking, it was a mixed bag. The Northeast index dropped sharply to 19 from 25, but the West index jumped to 19 from 14. The Midwest index fell to 14 from 17, while the South index was unchanged at 17.

The"three steps forward, two steps back" housing market recovery remains on track. But as I've noted numerous times, it won't be a robust rebound. The home buyer tax credit is helping bolster demand, as is the Federal Reserve's manipulation of the mortgage market. Improving affordability in many markets -- thanks to plunging prices -- is also bringing buyers out of the woodwork.

But the bubble days are long gone, and won't be coming back for several years. Instead, we'll see a slow, steady recovery in sales ... a gradual decline in the number of homes on the market ... a tepid rebound in home construction ... and broad-based stabilization in home prices as we head later into 2010. The latest NAHB report makes sense when viewed in that context.


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