Incoming: Housing That Could Change Our Take on the Housing Slump

The National Association of Homebuilders’ housing index was released this afternoon, and it revealed what many expected: As home prices decline and mortgage restrictions increase, homebuilders are not feeling good about the industry.

The Financial Times reported this morning that industry experts expected that the NAHB housing index — compiled from a monthly survey in which builders rate aspects of the housing situation as good, fair or
poor — would set a new low point of 17 (compared with 19, the revised number from
October).

However, the reading stayed at 19. Some thoughts:

  • Yay And Nay: A consistent reading is slightly positive sign, but given that 19 is the index’s lowest level in more than 20 years, not a reason to break out the champagne.
  • As the Magic 8 Ball Might Say, Outlook Not Good: Survey respondents also judge the amount of prospective buyers and offer a
    six-month outlook. Builder sales expectations for the next six months dropped a point to 26. However, buyer traffic rose from 15 to 17.
  • Regional Results Were Mixed: In the Northeast, the housing market index gained one point, rising to 27, and in the
    West increased three points to 18. However, the Midwestern HMI dropped one point to 13 and in the South declined two points
    to 19.
  • Steady, but Slumping: Single-family home sales remained at 18
    for the second month — again, not great news, as any reading under 50 indicates builders thinks conditions are bad.

The National Association of Realtors thinks residential starts will end up being 1.351 million this year and 1.14 million next year, down from 2006’s 1.801 million. Construction’s weakest year — 1991 — had more than 1.139 million, according to Bloomberg. Also today, the S&P homebuilder index
declined 6 percent, according to the Times.

But wait! There is  more indicative news on its way. The Commerce Department’s report tomorrow will reveal the annual residential construction rate for the year thus far. Bloomberg says the numbers may show that the decline has hit its worst point.

Now, *that* would be some unequivocally good news (finally) — or will we here things are still looking bad for the future? Stay tuned tomorrow …