NAHB Housing Sentiment and Present Conditions Crash to Covid-19 Lows

December 20, 2022

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1:35 am

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28 comments

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Economics

National Association of Homebuilders data, chart by Mish

Please consider the NAHB/Wells Fargo Housing Market Index (HMI) for December 2022.

The NAHB/Wells Fargo Housing Market Index (HMI) is based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes.

NAHB Housing Market Sentiment Component Indexes Detail

NAHB Housing Market Composite Index

*National Association of Homebuilders HMI Index, chart by Mish*

Bloomberg Econoday Consensus Outlook

“Spiraling downward, the housing market index has missed Econoday’s consensus every month this year. November’s 33 was 3 points short of the consensus. December’s consensus is 34.“

December’s 31 was also 3 points lower than consensus and 1 point lower than the entire consensus range of 32-35.

Well done! Perfection for 12 months is very difficult.

Existing Home Sales Decline 9th Month, Down Another 5.9 Percent

Existing home sales from the National Association of Realtors via St. Louis Fed

On November 18, I noted Existing Home Sales Decline 9th Month, Down Another 5.9 Percent

We have another report later this week. Will it be 10 in a row?

The Fed’s Industrial Production Report is a Disaster, Cyclical Data Signals Recession

In case you missed it, The Fed’s Industrial Production Report is a Disaster, Cyclical Data Signals Recession

Massive Collapse in Used Car Prices and Bankrupt Dealers Is Coming Right Up

Also on the economic front a Massive Collapse in Used Car Prices and Bankrupt Dealers Is Coming Right Up

The Philadelphia Fed Just Revised Jobs Lower by 1.2 Million for Q2

On December 16, 2022 The Philadelphia Fed Just Revised Jobs Lower by 1.2 Million for Q2

Not to worry, I am told there is no housing crash because prices haven’t fallen and the Philadelphia Fed revision is just noise.

This post originated at MishTalk.Com

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xbizo

3 years ago

When you pull demand forward with sub 3% interest rates, this is what happens. Nobody is losing money except the realtors on this dip.

Jack

3 years ago

Reply to xbizo

Realtors made their money last 2 years.

Now they are taking a vacation and spending the money they have made. They are the ones you see lining up in restaurants.

xbizo

3 years ago

Reply to Jack

agree. lots of cash available. If you lose your job, you can pick one up in a month. The only crash coming is in asset prices on reduced cash flows. Minimal loan foreclosures and business failures – except for zombie companies. But even then, most Zombie failures are two years out when their low debt rolls over to higher rates.

JackWebb

3 years ago

Holy smokes, that’s ominous. I’ve been negative all year but hadn’t fully grasped it until you published that home sales chart, Mish.

By the way, correct me if I’m wrong: Old rule is to compare the January 10th close to the close on the final trading day of December, and to check you go out to the last trading day of January. If the SP5 is down in those periods, bad year ahead. In ’22, -2.5% to 1/10, -7.2% to 1/31.

If there’s a surprise to me, it would be that analyst/whore earnings estimates and company guidance are only starting to crater. Who knows, now that i-banking is puking, maybe the analysts will throw up their hands and quit chasing business by sucking up to management. And maybe everyone will get a free pony just like Vermin Supreme promised in 2016. It earned my vote that year for its outrageousness; who knew that Trump, Congress, and Biden would make it come true.

OUdaveguy

3 years ago

So does Jim Cramer recommend retail investors buy housing stocks, or a mega ton of housing stocks?

KidHorn

3 years ago

We’re in a race to see what happens first. Inflation abates or the economy crashes. Hope inflation abates first, but I would bet on the economy crashing.

Salmo Trutta

3 years ago

Reply to KidHorn

The dunderheads are running the economic engine in reverse. It is hard for the average person to believe that banks do
not loan out savings or existing deposits – demand or time. But the DFIs always
create money by making loans to, or buying securities from, the non-bank
public.

This results in a double-bind for the Fed (FOMC
schizophrenia: Do I stop because inflation is increasing? Or do I go because
R-gDp is falling?). If it pursues a rather restrictive monetary policy, e.g.,
QT, interest rates tend to rise:

This places a damper on the creation of new money but,
paradoxically drives existing money (savings) out of circulation into frozen
deposits (un-used and un-spent). In a twinkling, the economy begins to suffer.

JackWebb

3 years ago

Reply to KidHorn

Inflation will persist. There’ll be a head fake as inventories are liquidated but cost pressures are still there. The Fed will blink. Count on it.

8dots

3 years ago

Tel Aviv, last year winner of a city with the highest cost of living in the world, got second place behind NYC and Singapore. SF and Lost Angeles are not far behind. Damascus and Tripoli Libya are last. The charts above indicate that the sleaze meter winners will have a correction.

JackWebb

3 years ago

Reply to 8dots

I cannot fathom paying extra to live in Tel Aviv.

Mouse

3 years ago

Real estate is about location, location, location. Broad measures only show the averages not location specific effects.

High speed broadband destroys the requirement for many jobs to be located in “Big City USA”. So does FedEx, UPS, etc. Many jobs can be almost anywhere. Video conferencing is still rather primitive and looks like the opening for Brady Bunch… but developers are working on a better *mouse*trap (zing!) so even some “in person” meetings might be unnecessary in the future.

Big Cities charge big taxes and big fees and big expenses — and they got away with it because one used to have little choice. More and more people have a choice because of broadband.

At the same time, Soros backed district attorneys are making life difficult in Big City. Crime is a problem. Taxes are too high relative to the services delivered. And for crying out loud — human feces on the streets of San Francisco? Third world countries dont have the sanitation problem that SF has. SF also has mind boggling wealth disparity, despite their wokeness and obscene “taxes” (which support political corruption, not the poor).

Home prices in Big City are in BIG trouble. Home prices in suburbia depend on schools (woke indocrination or education, can’t be both). Home prices depend on municipal services, not on public union pensions (a perk the public does not get). Home prices depend on jobs and businesses, not on excessive regulation and too many lawyers.

Big City is a mess. Suburbia depends on details. Rural depends on infrastructure. Treating locations as a commodity misses the point

Doug78

3 years ago

Reply to Mouse

“The Town Mouse and the Country Mouse” of Aesop’s Fables shows that the country-city opposition runs back into ancient Greek times and certainly well before. The theme is that while town life gives you opulence but you live in fear while country life you live plainly but you are tranquil.

Six000mileyear

3 years ago

The decline in home builder sentiment has been faster this cycle than compared to the Housing bubble cycle. This implies things are worse than they were after the 2007 housing bubble burst.

HippyDippy

3 years ago

Everything is imploding, yet the worst anyone can see is recession. Me? What with all of the decisions around the world being the opposite of correct, which is a big clue for narcissists, how could it only be a recession? Not to mention all the other garbage causes they will divert from productivity. Yeah, muh climate! Narcissists are the anti-reality construct. It’s why everything they do is backwards. Lucifer being the ultimate archetype of narcissism. Note how he is also the epitome of evil, as his defiance was a denial of God. Who is the archetype of reality. Which is love. And all there is, is love. So the narcissist represent all that is not, which is fear. Fear is never the answer.

vanderlyn

3 years ago

Reply to HippyDippy

read “ominous parallels” and read arendt “banality of evil”. the first is very deep and explains how usa copied nihilist path of bismark’s germany. banality of evil is a proper conclusion of eichmann the nazi. both important works for any thinker to delve into. explains a great deal.

HippyDippy

3 years ago

Reply to vanderlyn

‘Evil’ is the illusion you create when you believe in the separation of ‘things’. Lucifer’s. ‘sin’ was that he thought he was reality, when he was really just a costume that reality wore for the role. Evil is the denial of reality. God is the symbol of reality. For God represents love. Love is all there is. Helps to conquer all if you are all that exists. Lucifer is the fear we lay in our hearts. Fear is the anti-reality. Love is fearless because no man can serve two masters.

Lisa_Hooker

3 years ago

Reply to HippyDippy

Speaking of reality …

God is doG spelled backwards.

HippyDippy

3 years ago

Reply to Lisa_Hooker

Yeah, but have you also noticed that so many think God is love? It’s just what we name love. So if you love God you are looking in the opposite direction. So that seems sort of fitting.

KidHorn

3 years ago

Reply to HippyDippy

Because recession is just a word. And in the new world order, words can be re-defined to meet their agenda.

Zardoz

3 years ago

Reply to KidHorn

Can we have a new word for ‘agenda’? It’s been abused to the point of having no meaning.

KidHorn

3 years ago

Reply to Zardoz

Narrative

Zardoz

3 years ago

Reply to KidHorn

lol! (Eye twitch)

FromBrussels

3 years ago

Reply to Zardoz

…..rrmm ….Potato, maybe ?

Lisa_Hooker

3 years ago

Reply to FromBrussels

Unfortunately potato can be redefined to amuse Zardoz.

vanderlyn

3 years ago

as an investor in single and 2 to 4 family homes for decades, from east to west coast, norht and south in each area, i smell blood in the water the most in norcal area, moving down the coast to the southwest…………and slowly coming across……………..i like this analysis as it really is a huge spike down as the rate spike up was as fast as we have seen in 50 years. i’m personally glad. spun out of all my properties first half of this year. i’ll wait. r/e is so slow moving it’s great place to be a trend follower as i am with equities and FX also. usually around a decade up, and 5 years down. with huge variance. i’ll wait for the bottom and then see the trend up again for a year or so. i imagine i’ll be sitting around without any direct r/e investments for another half decade. maybe more. i’m still in the camp of inflation of money supply per shadow stats, so i think the FED will be jacking up rates for quite some time. good stuff mish. r/e is your best asset class, you take on. it happens to be the best road to wealth creation after tax. mele kalikimake

Lisa_Hooker

3 years ago

Reply to vanderlyn

It’s great to see a RE pro that can sell all his properties (without exception) within a six month window.

worleyeoe

3 years ago

And yet after 12 months, the big builder’s profits are still solidly positive. Now, keep that streak going for another 4-6 months, and let’s see what happens to 1st & 2nd quarter profits. Nice article, Mish! Keep them coming.

vanderlyn

3 years ago

Reply to worleyeoe

i love TOL here for a trade. many REITS lookikng priced right, too

NAHB Housing Sentiment and Present Conditions Crash to Covid-19 Lows

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