| Builder Sentiment Hits a New Low |
| Written by Jonathan Smoke | |
| 10.16.2008 | |
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Discuss this article on the forums. (0 posts) Yesterday the National Association of Home Builders and Wells Fargo released the October reading of builder sentiment known as the Housing Market Index. New lows were recorded in the survey-based monthly reading of builder opinions. NAHB Chief Economist David Seiders was quoted in NAHB’s press release as follows: “Undoubtedly, today’s HMI reflects builder assessments of the recent events on Wall Street, the rapid deterioration in job markets and the corresponding weakness in consumer confidence. This report provides clear evidence that an additional economic stimulus package is needed, including a substantial incentive to spur home buying. The impacts of the record-breaking housing contraction have spilled over to other key sectors of the economy and weighed heavily on financial markets, and stabilizing housing is now the best chance we have to limit the severity of recession.”
The October readings are striking. The overall index has never been lower since it began in January 1985. Underneath the composite reading, the Present conditions reading set a new low. The Traffic reading tied for the low set in July of this year. And perhaps most troubling, the view of the Next Six Months set a new low of 19, which is 17% lower than the prior low reading of 23, which was also recorded in July of this year. Recoveries are usually signaled by large bounces in the traffic reading as the above chart shows. But traffic clearly remains depressed. It will remain this way until consumer confidence improves and home buyers return to new home communities. When traffic improves, it will not take much to record a large change from such a low. 
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