Homebuilder Mood Worst Since 1995

Posted by: Peter Coy on May 15, 2006

Growing pessimism among builders. Today the National Association of Home Builders announced that in May its index of builders’ perceptions of sales conditions dropped to its lowest since mid-1995.
To quote the press release:

Rising mortgage rates, deepening affordability issues and the retreat of investors/speculators from the marketplace …

NAHB Chief Economist David Seiders calls it an "orderly cooling-down process."

Here's the history of the NAHB/Wells Fargo Housing Market Index since the start of last year:

2005 Jan 70
Feb 69
Mar 70
Apr 67
May 70
Jun 72
Jul 70
Aug 67
Sep 65
Oct 68
Nov 61
Dec 57
2006 Jan 57
Feb 56
Mar 54
Apr 51
May 45

Reader Comments

svender

May 16, 2006 11:20 AM


The real estate sector is going down hard. Nothing can stop it now.

I've lived through a few booms and this one (like all the others have) will revert to trend or may even overshoot on the downside slightly. We are probably looking at 50% drops in values in hot markets, in real terms. But, if you happen to live in the middle of the country where things didn't get wild then reverting to trend won't be a big deal.

This is also happening now in other places like Australia and New Zealand. Its also happening in the eastern half of Canada but the west is being propped up by a commodities bubble temporarily.

Though, it is the US market that is important as the real estate bubble has been proping up the whole US economy. An economy that has become a house of cards with debt at its foundations. In turn, US imports have been propping up Asia and other places. Now that the real estate bubble is popping there will be a domino effect on the US economy and then on the world economy.

Although I'm not happy to say it. I can't envision anything but a global recession on the horizon.

Wes

May 16, 2006 8:14 PM

Not suprising since the Fed bumped the rate up by another quater point. Just when you thought they were done. May be a sign that the economy is still not right or to curb inflation. Either way the housing market as bound to be affected by both interest rates and inflated prices.

www.wesleydjones.com
illmaticwes.blogspot.com

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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