Homebuilder Confidence Registers a 9

Today’s report shows that we are in a crisis situation. - NAHB Chairman Sandy Dunn

When I heard Diana Olick report this number on CNBC a few minutes ago I had to chuckle.  You have to realize that a number greater than 50 indicates that more builders view sales conditions as good than poor.  Nine is ..... not so good.  In fact, it’s the worst number in the history of the index dating back to 1985 (NAHB Confidence Index Chart).

You can see from the chart that confidence bottomed around 20 during the 1990-91 real estate bust.  Nine is a depression-type of number and housing is clearly not in recession but depression.

But when you get this kind of number, you have to start thinking that if the bottom isn’t in, it’s close.  The number is based on homebuilders' perceptions of current conditions, current traffic, and expectations for the next 6 months.  What this number tells us is: nobody is buying new homes right now and very few are even looking. 

Sentiment towards housing couldn’t be worse among potential buyers.  That also means that there are some unbelievable deals out there to be had.  Homebuilders are desperate to sell their inventories and recoup some of their costs.

This kind of thing makes me want to head out to the nearest development and start looking around.

Comments

[Steven Hansen:]

greg, be a man and go out an grab one of those deals. it reminds me of the kamikaze pilots of wwII.

2008 Nov 18 09:04 PM

[romorris:]

"head out to the nearest development and start looking around"

Tried that repeatedly for 2 years now. Khov will drop the price when hell freezes over. They'd rather sit on the assets and shake their signs till their hands bleed. You'll just be forced to move on after a lot of fruitless leg work.

2008 Nov 19 09:29 AM

[Ramboz:]

I have got to tell everyone out there. It costs just as much or more to build a new home today. Builders are offering tremendous incentives and discounts on homes, but they are not going to lose money. You will get a screamer deal, though. Maybe not with KHOV, but in my area, there are plenty of great deals.


On Nov 19 09:29 AM romorris wrote:

> "head out to the nearest development and start looking around" <br/>
>
> Tried that repeatedly for 2 years now. Khov will drop the price when
> hell freezes over. They'd rather sit on the assets and shake their
> signs till their hands bleed. You'll just be forced to move on after
> a lot of fruitless leg work.

2008 Nov 21 05:25 PM