By Maulik Mody
The National Association of Home Builders confidence index came in flat for September at 13, staying at the lowest level in more than a year. The depressed levels of the Housing Index sustained as a result of the expiration of the government tax credit, beating expectations of a rise to 14.
Despite the current mortgage rates staying near all time low levels, homebuilders are prevented from taking advantage of it given an unemployment rate hovering near 10% and mounting disclosures. An index reading below 50 indicates poor housing conditions. According the reports released by the NAHB, the measure of sales expectations for the next six months stayed at 18 for September, unchanged since last month. Regionally, the Midwest saw the biggest slump in confidence, as the index for the region fell from 15 to 12. While the North east and south saw a fall in confidence levels too, the level remained unchanged at 8 in the West.
This week will see the release of more housing data, including the sale of new and existing homes for last month. Analysts expect home sales to have increased for last month, after a 27.2% drop in existing home sales in July. While measures are expected to increase, they should remain at exceptionally subdued levels, suggesting that the housing market should stay in the doldrums at least till the end of the year. The main focus however will be in the FOMC meeting on Tuesday, although no change in the Fed’s target rate of 0.25% is expected.
Stocks rose in morning trade, fueled by better than forecast earnings by Lennar Corp and IBM’s announcement of a $1.7 billion takeover of Netezza Corp. The S&P rose 0.9% to 1135.90 as of 10:45 am while NASDAQ was 1.0% improved at 2340.36. Treasuries were mostly flat as the 10-yr yield was unchanged at 2.74%.