Print(October 19, 2009 Release)
Highlights
• The housing market index fell by 1 point in October to 18 from a 19 registered in September.
• The October index of 18 is less than 1 point above its 6 month average of 17.2.
• The buyer traffic index fell dramatically to 14 in October from 17 in September.
• Homebuilder expectations over the next 6 months fell 2 points to 27 compared to a September index of 29.
| NAHB Housing Market Index | ||||
| Oct 09 | Sep 09 | 3 mo Avg | 6 mo Avg | |
| Housing Market Index | 18 | 19 | 18.3 | 17.2 |
| Northeast | 25 | 24 | 23.7 | 20.9 |
| Midwest | 18 | 19 | 17.7 | 15.8 |
| South | 18 | 19 | 18.0 | 17.7 |
| West | 14 | 18 | 16.3 | 15.0 |
| Single Family Sales | ||||
| Present | 17 | 18 | 17.0 | 15.8 |
| Next 6 months | 27 | 29 | 28.7 | 27.5 |
| Buyer Traffic | 14 | 17 | 15.7 | 14.3 |
Source: National Association of Home Builders
Analysis
The housing market index is a leading indicator of future home building and new home sales. The October numbers reflect a deterioration in homebuilder confidence. Although the October index of 18 is 10 points above the cyclical bottom of 8 set in January, homebuilding activity appears to have lost some momentum. All of the indices in this report are hovering at historic low levels. A downside to the building industry still remains due to substantial monthly job losses, tight credit conditions and mounting foreclosures. An excess inventory of homes and the frightful prospect of a sizeable amount of option ARM and interest only resets over the next two years and the pending expiration of the $8,000 first-time homebuyer tax credit are making homebuildersincreasingly nervous. We continue to believe that the homebuilding recovery will be a slow and painful one.
October 26th, 2009 at 9:13 am
Questions. What do you mean by a “cyclical” low? What cycle are you refering to? If the index were to hit a low of 7 next month would that constitute a cyclical low. Are you refering to some seasonal low? Was there a cyclical low in the recession of the early 90s?
Your answer would be most helpful in my understanding.
Rex Peters