Yesterday, the National Association of Home Builders (NAHB) released their Housing Market Index (HMI) showing continued evidence that the new home market is experiencing a prolonged bout of depression.The release came along with a continued plea for a government bailout of the housing debacle from Chief Economist David Seiders who now suggests that without such measures, the economic growth could be impacted.
“The latest HMI shows that even fewer builders now foresee market conditions improving over the next six months compared with our April survey, and builder ratings of buyer traffic through model homes also have dropped off over the past month on a seasonally adjusted basis. This certainly adds fuel to the argument that targeted policy stimulus, in the form of a temporary tax credit for home buyers, is essential to halt the housing downswing and remove the heavy drag being exerted by housing on overall economic growth.”
It’s important to understand that sales for the new home market generally peak in the February-April timeframe and that this year’s results have been generally disappointing as noted by Sandy Dunn, current president of the NAHB “With the traditional home buying season now well underway, we have not seen the bump in sales activity that we normally would this time of year,”
Each component of the NAHB housing market index is now sitting at or near the worst levels ever seen in the over 20 years the data has been being compiled strongly suggesting that the current severe contraction has surpassed all other events seen in the last 22 years and is now firmly in uncharted territory.
