Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings November 2008

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing dramatic new lows and continued evidence that the new home market is experiencing a prolonged bout of depression.

Each component of the NAHB housing market index remain WELL BELOW 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.

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings March 2008

Today, 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 some congratulatory back patting of the Federal Reserve for their “aggressive actions” as well as a renewed plea for government bailout of the housing debacle from Chief Economist David Seiders who now suggests that without such measures, the economy could fall into recession.

“NAHB applauds the Federal Reserve’s aggressive actions over the weekend in response to escalation of financial market pressures, and we strongly encourage the Fed to ease monetary policy substantially when the Federal Open Market Committee meets tomorrow … With the deepening problems in today’s economy and financial markets, Congress and the Administration should enact additional stimulative measures, and the next round should be directed squarely at the housing sector … A temporary home buyer tax credit, FHA modernization and GSE oversight reform are the three most important things that Congress can accomplish right now to help ensure that housing does not drag the economy into a full-blown recession. Provided that the necessary actions are taken promptly, a housing market recovery most likely would take shape by the second half of this year.”

A representatives from the NAHB made very clear to me that although the individual builder respondent rating (“good”, “fair” and “poor”) data series that are the components of the overall composite HMI series will no longer be published, the methodology has not changed.

When asked why the underlying components would not be published the representative indicated that he was simply instructed to no longer include in the breakouts in the content that gets published to the web.

It’s important to understand that 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.

This suggests that the current severe contraction has surpassed all other events seen in the last 22 years and is now firmly in uncharted territory.

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings September 2007

Today, the National Association of Home Builders (NAHB) released their Housing Market Index (HMI) showing additional evidence that the new home market is experiencing a new leg down in declines.

The release came along with a guarded yet optimistic perspective from Chief Economist David Seiders who now sees home sales recovering by the second quarter of 2008.

“Certainly problems across the mortgage finance arena are taking their toll on buyer demand, which is weighing heavily on builder confidence measures, … We now expect to see home sales return to an upward path by the second quarter of 2008 and we expect housing starts to begin a gradual recovery process by the third quarter of next year. At that point, the market will have substantial growth potential.”

Measuring builder confidence across six key data points, the builder survey has been a bellwether for the new home market since 1985.

The component measures used to formulate the overall HMI are respondent ratings on “present conditions”, “future conditions” and “buyer traffic” all of which continue to indicating significant current and future weakness as the new home market slumps its way slowly forward, now long separated from an exceptionally disappointing spring selling season.

In fact, July’s “present”, “future” and “buyer traffic” condition results have moved even nearer to the worst levels seen since early 1991 when the nation’s housing market was slumping through its last major housing bust.

The following charts show “present conditions”, “future conditions” and “buyer traffic” both smoothed since 1986 and unadjusted since 2005 (click for larger versions).

Keep in mind that for each measure respondents are asked to assign both a “good” and “poor” rating so in each chart you will notice “good” slumping while “poor” is surging.