Monday, April 17, 2006

Builder Sentiment Falls, Lowest Since 2001

From Reuters:

U.S. home builder sentiment lowest since Nov 2001

An index of U.S. home builder sentiment fell for a fourth consecutive month in April to its lowest since November 2001, the National Association of Home Builders said on Wednesday.

The drop was in response to rising mortgage rates, continued affordability problems and subsiding demand from investors and speculators, the NAHB said.

The NAHB/Wells Fargo Housing Market index slid to 50 in April, seasonally adjusted, from March's downwardly revised 54. It was the lowest reading since November 2001, when it stood at 48.

"Home builders definitely view this as something of a transition period, where demand from speculators is easing off and the market is heading to a more sustainable level of activity following the record-breaking performance of 2005," said NAHB President David Pressly, a home builder in Statesville, North Carolina, in a press release.

The confidence level indicates the majority of builders see conditions as neither positive nor negative in their markets, the NAHB said. Readings above 50 indicate more builders view their market conditions as favorable, rather than poor.

The index was also below its year-ago level of 67.
...
The NAHB said its index for current sales of new homes fell to 54 in April from a downwardly revised 59 in March.

The index measuring builder sentiment over the next six months slipped to 58 from 62 in March, while the potential buyer traffic index fell to 39 from an upwardly revised 40.

21 Comments:

Blogger grim said...

Housing Starts and Building Permits due out at 8:30am tomorrow morning.

grim

4/17/2006 04:06:00 PM  
Blogger chicagofinance said...

This comment has been removed by a blog administrator.

4/17/2006 04:16:00 PM  
Blogger chicagofinance said...

Anecdote:

Spoke to a realtor based out of Westfield. He said it is still a seller's market there, but relatively close to being balanced. His advice to clients is to price just slightly below 2005 peak levels so that the property will move. His concern isn't so much the current state of the market, but rather where the market will be in about 3-6 months. He thought that there is going to be a wave of inventory coming, and you do not want the stigma of a property on the market more than a few weeks. A typical property in a good town is gone in 3-5 months, but if priced correctly, should be gone in under a month.

4/17/2006 04:16:00 PM  
Blogger Shailesh Gala said...

http://en.wikipedia.org/wiki/Housing_bubble

The crash of the Japanese asset price bubble from 1990 on has been very damaging to the Japanese economy and the lives of many Japanese who have lived through it, as is also true of the recent crash of the real estate bubble in China's largest city, Shanghai.

Unlike a stock market crash following a bubble, a real-estate "crash" is usually a relatively slower process, because sellers just decide not to sell. Historically due to inflation, prices do not fall in nominal terms, rather they stay "flat" for a period of 3-5 years.

Are we in Japan like situation?? or are we in flat 3-5 years situation??

4/17/2006 04:41:00 PM  
Blogger grim said...

CF,

His analysis is spot on. I've spoken to a few realtors who have said the same. A quick glance at the DOM of the recent under contracts show it to be true.

Looks like a number of homes are moving in the 10 days or less range. While I'm can't make a value call, the prices seem to be more reasonable than similar homes on the market.

Long DOM homes are also selling, but only after large price reductions. A UC in Westfield today shows that to be true.. Original list was $925,000, went under contract with a list price of $799,000.

Unfortunately, it'll be some time before we know what these UC properties sold for.

Can't argue though. If the property is priced better than anything similar in the same market, it'll move.

grim

4/17/2006 04:44:00 PM  
Anonymous Anonymous said...

Poor poor Greedy cardboard box builders.

Collapse!

4/17/2006 06:45:00 PM  
Blogger Richard said...

chicago, i know westfield very well as we've been looking there for a few months. yes it's still a sellers market there with properties selling more than at peak prices in 2005, if you can believe it. the mid priced properties however are not moving, just the top stuff for whatever tier you're looking at.

i've told my wife we're waiting another year and will revisit westfield then. my own worse case scenario would have prices being equal to today with interest rates higher but we can still save more than anticipated increases in borrowing costs, unless of course rates go to 10% ;)

4/17/2006 06:47:00 PM  
Blogger grim said...

Can someone send me a link to this piece in the WSJ:

We Must Undo Kelo Decision's Damage

4/18/2006 06:19:00 AM  
Anonymous Anonymous said...

The fools paying over peak prices will be regretting it shortly.

Ask all those bullish Microsoft shareholders back 5 years ago

4/18/2006 07:22:00 AM  
Anonymous build said...

Looking for US.... If you are like me it seems like there is never enough time in the day.. You get home late and leave early.. then the weekends thats another story by itself. My wife has found it easier to hire somebody if you we need help with build. She fond a great site for build at http://build444.com and wanted to share it with you.. Im glad to find help when I need it.. I hope you have great luck remodeling your home...

4/22/2006 02:08:00 PM  
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Anonymous Anonymous said...

In this "cooling off" real estate market, suggest that the average residence is shown about 4 times a week during the first 3 weeks of a real estate listing. After that, an unsold home goes "stale" ... it gets shown less .

6/20/2006 06:46:00 AM  
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6/20/2006 02:31:00 PM  
Anonymous Anonymous said...

In this "cooling off" real estate market, suggest that the average residence is shown about 4 times a week during the first 3 weeks of a real estate listing. After that, an unsold home goes "stale" ... it gets shown less .

6/21/2006 08:44:00 PM  
Anonymous Anonymous said...

Potential buyers have to say "yes" many times to purchase your home ... but a single "no" over a seemingly minor item can kill the deal. You can do something about this.

6/22/2006 10:05:00 AM  
Anonymous Anonymous said...

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6/25/2006 10:25:00 PM  
Anonymous Anonymous said...

Potential buyers have to say "yes" many times to purchase your home ... but a single "no" over a seemingly minor item can kill the deal. You can do something about this.

6/26/2006 04:46:00 PM  
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