Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings January 2015

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that assessments of housing activity declined in January with the composite HMI index falling slightly to 58 from 61 the prior month while the "buyer traffic" index declined to 39.

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings April 2014

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that assessments of housing activity went flat in April with the composite HMI index climbing to 47 from 46 the prior month while the "buyer traffic" index remained unchanged at a level of 32.

The recent pullback has been notable and while many are suggesting that inclement weather is responsible, only time will tell if this is the beginning of an ongoing downtrend for new construction or just a momentary pause.

Looking at the data, it is fairly clear that the last year of results indicate a major change in builder sentiment likely coming as a result of improvements in confidence given the notable rise in buyer traffic, reduced inventory and a more balanced monthly supply.

Homebuilder Blues: NAHB/Wells Fargo Home Builder Ratings August 2011

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing that measures remained flat in August with the composite HMI index remaining at 15 while the "buyer traffic" index remained near record lows as home builders continue to plod through the weakest activity seen in generations.

It's important to recognize that currently all measures are continuing to show epic weakness with even the strongest sentiment gain only slightly beating the level seen last year.

Clearly the new home market has seen another no-show start to the buying season with the typically strongest selling months (remember Bob Toll's analysis of the seasons) fully behind it.

The new home market will likely not resume any significant form of healthy function until the considerable overhang of inventory is cleared.

Buyer Traffic Forecasting Decline

Comparing today’s new residential construction data to the recently released NAHB housing market indicators appears to suggest that we may soon see a notable declines to housing starts and permits.

The “buyer traffic” index has been declining steadily since September 2009 indicating that home builders are seeing declining foot traffic with an overall level only slightly higher buyer activity than seen in the panic stricken days of late 2008.

This is a notable finding as in recent years the “buyer traffic” series has indicated the trend generally well in advance of the housing starts and permits data.

Further, as Bob Toll has noted many times in the past, the start of the year is typically the strongest period for the new home market so given the latest trends it appears that new housing is off to a particularly weak start.

Looking at the chart (click for full-screen dynamic version) the weakness suggested by the “buyer traffic” series has yet to be reflected in the housing starts series.