Today’s release of the Housing Market Index indicates that confidence among home builders continues to abate. Down 1 to 13, the latest level is far below a reading of 50, which would suggest residential home builders are neither optimistic or pessimistic.
Let’s take a look at one of the key components that make up the index, prospective buyer traffic. In August, traffic held steady at 10, the lowest reading since march, which was also touched 17 months ago.
As noted by the chart above, builder sentiment has closely tracked the drop in prospective buyers who have visited model homes.
Traffic has held at a fairly steady but low level over the past two years, and at a minimum, the new home market has stabilized. But we are not seeing a solid foundation being put in place that would be the lift off point for a sustained rebound in housing starts.
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