The National Association of Home Builders produces a housing market index based on a survey in which respondents from this organization are asked to rate the general economy and housing market conditions. The housing market index is a weighted average of separate diffusion indexes: present sales of new homes, sale of new homes expected in the next six months, and traffic of prospective buyers in new homes. (National Association of Home Builders/Wells Fargo) Why Investors Care
| Released on 9/18/07 For Sep 2007 | ||||||||
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Highlights
There's more and more trouble, at least if you're a home builder. The National Association of Home Builders/Wells Fargo housing index fell another 2 points in September to 20, which ties the record low set in January 1991. The breakdown of components usually shows roughly equal declines across current sales, future sales and prospective traffic. But not this time. Instead, traffic is stable and current sales are only a little lower, with weakness squarely centered in future sales. Weak expectations are a reflection of the trouble home builders have had for the past year, suffering from swelling supply that's 9.6 months for existing homes and 7.5 months for new homes.
The text of the report said buyers may be timing the bottom of the market, which it warned against: "... with the inventory situation what it is and the selection of units and deals to be had, now is a very good time to buy a home." The report said mortgage availability under the government-supported part of the market is actually "very good," and said home sales should return to an upward path by the second quarter next year.
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