Homebuilder Confidence Is Hitting A Rough Patch

Includes: XHB
by: Wall Street Strategies

By David Urani

The NAHB/Wells Fargo Housing Market Index was a flop, and echoes an ongoing rough patch that's been evident among several housing data points recently. The index fell for the first time in seven months to 25 from 28 whereas the Street was looking for it to rise to 29. Looking at the press release, home builders seem to feel like maybe earlier optimism was a little premature. Buyer interest has indeed been getting stronger for housing, and that's raised expectations for many builders but now it appears much of that buyer interest is not manifesting into sales. We've noted before that there's evidence of a bottleneck in mortgage lending, where buyers are having trouble getting approved, or where appraisals are coming in lower than the proposed price. There may also simply be some buyer hesitance as well.

This index tends to track housing starts well, so look out for a soft result on Tuesday out of the Census Bureau.