Builders are no more confident about the market for new single family homes than they were back on October, according to the latest pulse-reading by the National Association of Home Builders.
NAHB's Housing Market Index crept up a point to 19 from a downwardly revised index of 18 in December, the organization reported today. The January reading is equal to those of October and November.
"The HMI has held within a narrow two-point range for the past five months, indicating that builder views of housing market conditions essentially haven't changed over that time," said NAHB Chief Economist David Seiders."Builders are anticipating a time when market conditions will support an upswing in building activity--most likely in the second half of 2008."
Among the components of the overall HMI, the index gauging current sales conditions remained at 19 in January, but the index gauging sales expectations for the next six months rose two points to 28. The index gauging traffic of prospective buyers rose one point to 14.
Regionally, the HMI in the Northeast remained stuck at 20; the Midwest rose two points to 17; the South picked up three points to 23 and the West dropped five points to 13.
"We applaud the Federal Reserve's stated willingness to act aggressively to help stimulate the economy through further rate cuts in the coming weeks," said builder Brian Catalde, who serves as president of the NAHB. "Congress must also continue its efforts to help resolve the credit crunch and get housing back on track by moving quickly to get a Federal Housing Administration reform bill to the President's desk and accomplish much-needed oversight reform for the government-sponsored enterprises Fannie Mae and Freddie Mac."
The numbers were expected on Wall Street, where the builder stocks had a good day as the Dow Jones Industrial average swung between small gains, large gains and ended with a 38 point loss. The S&P home builder ETF (AMEX: XHB) closed up 3.69% at $16.85. Among the individual builder stocks, Hovnanian Enterprises (NYSE:HOV), Standard Pacific (NYSE:SPF), M/I Homes (NYSE:MHO) and WCI (NYSE:WCI) were all up by double digit percentages, the latter initially on a comment by Chairman Carl Icahn on CNBC to anchor Erin Burnett that talk of a bankruptcy filing by WCI was premature. That was followed by news that WCI got approval for covenant waivers from its creditors.
Carl Reichardt, the lead home building analyst at Wachovia Securities, leaned toward the positive in a research note to ivestors. "The slight improvement in future sales trends relative to current trends may be an indication that builders are hoping to see some relief through the upcoming selling season," he wrote. "Our own monthly survey of 150 new home sales managers in 20 markets throughout the nation did indicate modestly improved quality of traffic (in terms of the ability or desire to buy) but little improvement in sales activity. With inventories high, mortgage capital availability tight, consumer confidence receding and affordability still relatively low, we expect continuing weak sentiment reads from builders until field activity begins to rebound."