Tag Archives: Home Builder

Home Builder Optimism Collapses

Upton Sinclair once noted: “It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

But at some point, as Mike Tyson opined “someone punches you in the face.”

And it appears from the latest NAHB Sentiment Index that home builders in America just got ‘punched in the face’.

For the second month in a row, home builder optimism crashed amid broad-based declines across sales, expectations and buyer traffic (down 4 to 56 and well below the 60 print expected) as hope begins to collapse back to the housing market’s reality…

https://www.zerohedge.com/sites/default/files/inline-images/2018-12-17_7-04-59.jpg?itok=tCr_ZLGf

Additionally, as Bloomberg notes, a gauge of the NAHB six-month sales outlook dropped to the lowest since March 2016 while a measure of current sales for single-family homes decreased to a three-year low. That suggests demand will remain soft as there’s still a shortage of affordably-priced listings, in addition to property values that have been outpacing wage gains.

Three of four geographic regions showed a decline, led by the Northeast, where sentiment plunged by the most since June 2010.

“We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs,” NAHB Chairman Randy Noel, a custom-home builder from Louisiana, said in a statement.

“However, recent declines in mortgage interest rates should help move the market forward in early 2019.”

All eyes on Powell once again.

Source: ZeroHedge

Existing Home Sales Drop For 7th Straight Month As Homebuilders Stocks Collapse

With US home builder stocks having their worst year since 2007, hope is high that September will show the long-awaited rebound in home sales (despite a soaring mortgage rate).

After ‘stabilizing’ unchanged in August, existing home sales were expected to drop 0.9% MoM in September, but instead August’s data was revised notably lower and September plunged… down 3.4% MoM – the biggest drop since Feb 2016.

https://www.zerohedge.com/sites/default/files/inline-images/2018-10-19_7-03-44.jpg?itok=pUjsHZjw

With SAAR at its lowest since Nov 2015…

https://www.zerohedge.com/sites/default/files/inline-images/2018-10-19_7-05-08.jpg?itok=BO6wHo3b

This is the seventh month in a row of annual declines in existing home sales…

https://www.zerohedge.com/sites/default/files/inline-images/2018-10-19_7-00-59.jpg?itok=A_tsfp_0

Sales fell across all price ranges (not just the low-end as we have seen recently).

Median home price rose 4.2% from last year to $258,100

And you can’t blame supply as it rose notably – 4.4 months supply in Sept. vs. 4.3 in Aug.

As NAR notes:

“This is the lowest existing home sales level since November 2015,” he said.

A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

“There is a clear shift in the market with another month of rising inventory on a year over year basis, though seasonal factors are leading to a third straight month of declining inventory,” said Yun.

“Homes will take a bit longer to sell compared to the super-heated fast pace seen earlier this year.”

Home builder stocks are collapsing…

https://www.zerohedge.com/sites/default/files/inline-images/2018-10-19_6-45-35.jpg?itok=cfiJpBtt

This is the worst year for home builder stocks since 2007…

https://www.zerohedge.com/sites/default/files/inline-images/2018-10-19_6-50-06.jpg?itok=J0Hgbodc

Probably nothing. Just keep hiking rates.

Source: ZeroHedge

Home Builder Stocks Decline As Fed Hikes Rates And Unwinds

The bloom is off the rose for home builders. Yes, it had been a great run, fueled by The Fed’s zero-interest rate policy (ZIRP) and asset purchases (QE). But despite a roaring economy, SPDR S&P Home builders ETF have been falling since January as The Federal Reserve Open Market Committee (FOMC) sticks to their guns and keeps normalizing interest rates.

https://confoundedinterestnet.files.wordpress.com/2018/10/spdrhbfed.png

Yes, the Fed Dots Plot project indicates that there is still upside momentum to short-term interest rates.

https://confoundedinterestnet.files.wordpress.com/2018/10/feddotsplots.png

And the Fed’s System Open Market Accounts (SOMA) show a declining inventory of Treasury Notes and Bonds to let mature.

https://confoundedinterestnet.files.wordpress.com/2018/10/somadist.png

Source: Confounded Interest

 

Lumber Futures Nosedive Along With Home Building Stocks

Is the music over for housing construction and the housing bubble?

Lumber futures, a harbinger for housing, are down solidly on the year amid weaker demand.

https://confoundedinterestnet.files.wordpress.com/2018/09/timber.png

And US home building companies relative to the S&P 500 index has been falling since 2017.

https://confoundedinterestnet.files.wordpress.com/2018/09/homebldgsp.png

Or are home builders “riders on the storm”? Or is it “The End” of the housing bubble?

Source: Confounded Interest