Homebuilders Recovered, But Nobody Showed Up

What if you throw a "recovery party" but nobody shows up? That's the Question of the Day. Interestingly enough that's the very same question Kevin Depew on Minyanville asked nearly four months ago on March 20th 2007 in "Five Things" in relation to the February NAHB Housing Market Index.

Yesterday afternoon the National Association of Homebuilders released their closely-watched builders' index.

Wasn't it just a month ago when the bottom in housing was finally sighted thanks to a rise to 40 from 35?

Yes, it was just a month ago.

The rise in February was revised slightly lower yesterday, to 39 from 40, and declined in March to 36, ending six months of recovery .

When the NAHB's housing market index is under 50, the number of builders who see "poor" sales outnumber the number who see "good" sales.

The chart below shows the NAHB HMI in perspective. Even after the six-month recovery, builder confidence remains at levels that are lower than at any point since 1995.

What if you throw a "recovery" but nobody shows up?

Hmmmn. It seems to me that no one did show up.... In March ... In April ... In May ... In June ... In July.

Want proof? Here is the latest Housing Market Index.

click to enlarge

Fear not. The index can only go to zero. The bottom must be near. Then again the "bottom must be near call" is in reference to the index. It took Japan over 18 years to hit bottom in terms of both land prices and time.

In the meantime let's take a look at the recovery in terms of the major homebuilders.

Click on any chart in this series to see a sharper image.

The Lennar (LEN) Recovery

The Dominion (DHOM) Recovery

Pulte (PHM) Recovery

The above chart is a classic bear market three wave sucker rally on low volume.

KB Home (KBH) Recovery

Perhaps not as pretty as the Pulte Chart, the KBH chart is stunning in its example of distribution on light volume to suckers playing the last trend.

Meritage (MTH)

Toll Brothers (TOL)

Some recovery, eh? By the way, take a good hard look at those charts because this post is not really about housing at all. This post is about what happens when expected buyers do not show up, no matter what the market is.