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| Sentiment Backs Up Comments at IBS |
| Written by Jonathan Smoke | |
| 02.19.2008 | |
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Discuss this article on the forums. (0 posts) As I reported last week, I heard from builders across the U.S. that traffic and sales had picked up since January. Today’s release of the Housing Market Index, the monthly measure of builder sentiment, backs up the positive change. NAHB reported the February readings this afternoon in a press release. In February, the housing market index gauging current sales conditions for single-family homes rose one point to 20, while the index gauging sales expectations for the next six months declined one point to 27. Meanwhile, the index gauging traffic of prospective buyers rose five points to 19, its highest level since July of 2007. It was this latter component measure of traffic of perspective buyers (the green line in the chart) that was of most significance to me. A positive change of more than a couple of points rarely occurs, so a 5 point jump is encouraging. The last time a positive change of 5 or more points occurred was in September of 2002, and prior to that it was just after the nation’s psyche recovered after 9/11. The numbers are still low. And NAHB Chief Economist David Seiders was quoted in the press release as being cautious: “That said, builders know there’s a difference between people looking and people buying, and their current outlook remains quite subdued. Additional stimulative measures on the legislative and policy side are definitely needed to bolster consumer confidence and help bring about a housing and economic recovery.”
NAHB also breaks down the HMI into regional readings. Three out of four regions posted HMI gains for February, including a three-point gain to 24 in the Northeast, a two-point gain to 24 in the South and a 2-point gain to 15 in the West. The Midwest registered no change for the month at 16. Any positive momentum at this point is good. It takes traffic to create sales. And while the HMI history is limited to the last 22+ years, the last recovery from a national housing downturn in 1990-1991 was led by the traffic indicator bottoming out first. |
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