Is Housing Starting to Form a Bottom? NAHB HMI, Permit and Housing Starts Update
The NAHB/Wells Fargo HMI, Single-family Sales (Present and Next 6 Months), Buyer Traffic
The National Association of Homebuilders [NAHB] reported the confidence level at 16 for the month of August. A confidence reading above 50 is considered positive while a reading below 50 is considered negative. The level remained the same since last month, but has fallen 16% YTD from 19 in Jan 2008 and over 50% since Jan 2007.
The positives are the increases in both the present single-family sales (15 to 16) and future single-family sales for the next 6 months (23 to 25), while the prospective buyers traffic component remained unchanged at 12. The Housing and Economic Recovery Act of 2008 was signed by President Bush on July 30 and provides a temporary $7,500 tax credit for first-time home buyers who meet their requirements. Details on the tax credit can be found here: www.federalhousingtaxcredit.com. This act should increase the traffic of prospective buyers in the coming months before the credit expires on
The HMI Index by Region:
- Northeast was up +2 to 16 from 14
- South remains unchanged at 20
- West declined
Department of Commerce Data on Building Permits and Housing Starts
Building Permits for privately-owned housing units in July were down 17.7% in June at a rate of 937,000 vs. 1.138 million in June and down 32.4% compared to a year ago. Single-family building permits were at a rate of 584,000, down 5.2% since June’s 616,000 number.
Privately-owned housing starts were down 11% to a rate of 965,000 vs. 1.084 million in June and down 29.6% compared to a year ago. New single-family housing production slowed by 3% to a seasonally adjusted annual rate of 641,000 units, or the lowest level since 1991.
Permit Issuance by Region
- Northeast declined 63.4%*
- South up 4.1%
- West declined 14.8%
Housing Starts by Region
- Northeast declined 30.4%*
- South declined 8.2%
- West declined 8.2%
*The Northeast’s permit issuance and housing starts were affected by a building code change in
For detailed statistics, please visit the U.S. Census Bureau-New Residential Construction.
The chart above suggests that housing may have started to form a bottom. I am NOT calling a bottom since the housing crisis is far from over. The graphical representation merely suggests that the precipitous decline since 2005 in the HMI index and its components is slowing down and may be starting to level out. We’ll only see in hindsight whether or not we are starting to form a bottom.
Related Articles
|
Top Rated Comment Streams:
-
1.Hedged In662
- 2.
-
3.Smarty_Pants422
-
4.axelrod608326
-
5.cos1000274
- Free E-Newsletters
- About Seeking Alpha
- About Us
- Contact Us
- What's New
- Readers Feedback
- Advertise With Us
- Contributors
- Contribute an Article
- Feature Your Book
- Our Contributors
- Anonymous Contributions
- Dispute an Article?
- Legal
- Terms of Use
- Privacy
- Copyright
This article has 9 comments:
-
cyclops2020
-
15 Comments
Aug 22 08:50 AM-
profitc123
-
1 Comment
Aug 22 09:03 AM-
John C. Lee
-
133 Comments
My Website
Aug 22 10:40 AMprofitc123 - How do you know a bottom will be hit in the next 12 months? Aren't bottoms identified in hindsight? Hence, "We’ll only see in hindsight whether or not we are starting to form a bottom."
Just an economic data update...not a crystal ball.
-
billddrummer
-
549 Comments
Aug 22 11:59 AMThe other thing to consider is that unlike other housing recoveries, I believe this one will be a long slow one, rather than a V shaped one we've seen in the past. Look at the Japanese real estate market after it was pummeled in the mid-1990s. There was essentially no real estate appreciation for nearly 15 years.
We may see the same trend here. Instead of indicators rising smartly after the bottom is reached, look for 0% appreciation for 5-7 years. That's about how long it will take to absorb the oversupply of inventory.
And that's the good news, presumes the broader economy continues to move forward, and no undue shocks to supply chains or commodity prices occur (wars, energy spikes etc.) while the housing recovery occurs.
-
John C. Lee
-
133 Comments
My Website
Aug 22 12:17 PMHousing numbers are only a fraction of the overall big picture. The supply must be absorbed, while the demand rises and a 1-3 year spike in building permits. The unemployment rate needs to fall back to lower levels and rents need to be steadily increasing. I don't see much of anything like that.
-
User 248474
-
1 Comment
Aug 22 01:22 PM-
Can'tSpotABubble?
-
20 Comments
Aug 22 06:30 PM1) I by a property with 20% cash down, no fudging on this amount of any kind or assistance.
2) I rent said property to a tenant at a market rate
3) I have positive cash flow day one after P.I.T.I and associated costs
Until that day is reached we are no where near a bottom.
Period.... End of story.
-
joof
-
31 Comments
Aug 22 06:39 PM-
2houndz
-
84 Comments
Aug 22 08:12 PMThe above file suggests that the moon may be made of green cheese. I am NOT representing that the moon is made of green cheese, the graphical representation merely suggests that it could be made of green cheese and the precipitous blah, blah......