U.S. home builder sentiment rises in May
On Monday May 18, 2009, 1:01 pm EDT
WASHINGTON (Reuters) - U.S. homebuilder sentiment jumped to its highest level in eight months in May, a private survey showed on Monday, supporting views that the three-year housing slump might be close to an end.
The National Association of Home Builders/Wells Fargo Housing Market Index rose to 16 from 14 in April, in line with market expectations.
The NAHB attributed the second consecutive monthly increase in the gauge -- which measures builder confidence in the market for newly built, single family homes -- to "the best home buying conditions of a lifetime."
"This continued increase indicates that home builders feel we're at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves," said NAHB chief economist David Crowe.
Other housing indicators have recently shown a sharp slowing in the pace of the market's decline, raising optimism a bottom was not too far away.
The collapse of domestic house prices and the subsequent global credit crisis were the main catalysts for the U.S. recession, now in its 17th month.
The report also showed two out of three subindexes of the Housing Market Index rising in May. The current sales conditions gauge climbed two points to 14, while the sales expectations measure for the next six months rose three points to 27. The traffic of prospective buyers index was unchanged at 13 in May.
2 comments:
Where do you think sentiment will end up by the end of the year. Also, I'm not familiar with the measure, but I assume that its a leading indicator. How much does the market lag the sentiment?
Well, similar to the consumer sentiment survey, the builder survey measures "the feel" of the building marketplace. This is how the NAHB describes the metric...
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
So the number yesterday still indicates a "poor" market condition BUT the number has now increased two months consecutively and it is at its highest in eight months. This seems to indicate a halt to decline...at least a decline in negative sentiment.
I expect the sentiment to stay poor throughout 2009 with minor improvements based on the overall job market-inventory overhang-difficulty in financing-slow resale velocity.
"Lag" is probably not a tangible focus with this type of survey. Better to look at pending sales, actual sales, and unsold housing units...these tell the story.
Post a Comment