The National Association of Home Builders released its Housing Market Index (HMI) today. The results were predictably poor. The Index fell for the third consecutive month, to a level of 13, the lowest level since the spring of 2009.
The index numbers are calculated from a variety of survey answers from builders regarding their outlook on the market in coming months. A score of 50 is considered neutral, with scores above indicating a positive outlook, and numbers below 50 representing a negative outlook.
From the report:
“Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren’t gaining any traction” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “Meanwhile, many continue to report that problems with inaccurate appraisals, competition from the large number of distressed properties on the market, and tight consumer lending conditions are causing them to lose potential sales”.
None of this should be especially surprising to anybody who is paying attention. The economic “recovery” appears to be grinding to a halt. The mood of the Federal Reserve has turned more pessimistic in recent months and consumer sentiment is down. Housing prices and sales are declining after the expiration of the first time home buyer tax credit. Most importantly, the labor market has really not improved at all over the last year.
I cannot imagine the HMI making any sort of substantial gains until the labor market improves and people are actually able to purchase homes again. This is not rocket science. What do you think? Let me know in the comments section below.
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