| Builder Sentiment Reaches New Lows |
| Written by Jonathan Smoke | |
| 01.21.2009 | |
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Discuss this article on the forums. (0 posts) As I flew cross country this morning to attend the International Builder Show, the National Association of Home Builders and Wells Fargo released the January reading of builder sentiment known as the Housing Market Index. It should be no surprise to anyone in this industry that the current index reading hit a new all-time low. The overall HMI index reading for January was 8, down from 9 in December. Even more telling, the Current component, which measures feelings about current market conditions, registered a 6, down from 8 in December. Simply put, if you thought conditions at the end of 2008 just couldn’t get worse, they have. This seems to match the reserved and uncharacteristically somber mood of people attending the Builder Show. It’s ironic that a new factor that may be impacting current conditions is the expectation of consumers that Congress and the new administration will enact a stimulus plan that will offer some form of incentive to purchase a home. Of course fear of job loss and general economic uncertainty don’t help either. At this point, all eyes are on Washington. While there are concerns about what program would be best for the economy and the industry, taking action quickly is critical, lest we lose the important momentum to be gained from the early spring selling season.  Interestingly the component reading for Traffic increased from 7 to 8 this month. Likewise, the “Next 6 Months” component rose to 17 from its all-time low of 16 in December. As I’ve written before, a telling sign that we have reached bottom will be a Traffic reading that posts a major monthly increase of 33% or more. We’ll get December permits and starts tomorrow, but at this point those metrics won’t matter as much as what happens in Washington over the coming days and weeks. 
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