Homebuilder Confidence At 15 Year Low
The homebuilders association has their monthly report out. “Increased concerns about interest rates and housing affordability caused builder confidence in the market for new single-family homes to slip three more notches to 39, according to the National Association of Home Builders.”
“‘The HMI is down from its most recent cyclical high of 72 in June of last year, and reflects growing builder uncertainly on the heels of reduced sales and increased cancellations related to eroding affordability as well as an ongoing withdrawal of investors/speculators from the marketplace,’ said NAHB Chief Economist David Seiders.”
“‘But just as concerning to many builders is the potential for more monetary tightening by the Federal Reserve that could drive interest rates, and thereby homeownership costs, even higher,’ Seiders added.”
“All three component indexes fell in July. The largest decline was in the index gauging sales expectations for the next six months, which fell five points to 46. The index gauging current sales of new single-family homes fell four points to 43 and the index gauging traffic of prospective buyers fell two points to 27. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.”
From MarketWatch. “Home builders’ confidence plunged to a 15-year low in July. It’s the fastest decline in the 21-year history of the index, which has had a fairly good record of predicting the number of new homes started.”
“Sentiment of builders in the West, who have been the most optimistic, plunged nine points to 51. Sentiment fell five points to 36 in the Northeast and fell four points to 21 in the Midwest. Sentiment improved to 50 from 48 in the South. The index peaked at 72 last June and has fallen in 11 months since then.”
TIMBER!!!!!!!!!!!!
HB’s stocks are looking worse everyday!
Woohoo! New houses for everyone!
“All these homes are belong to us!”
muhahahahaha
hahaha If no one understands this, think of the video game, “All your base are belong to us”
Ah! Don’t make me cry like that!
Does anyone remeber the article I posted about Larry Kudlow pimping these HB’s last July! LOL. He claimed they were great buys. Now they are down 50-60%. Anyone who believe him or Cramer is a dumb a$$!
I found this from Cramer on 3/30/06.
Think we’ll hear a Mea Culpa? I won’t hold my breath!
Jim Cramer Blog
Downside Is Limited for Homebuilders
By Jim Cramer
RealMoney.com Columnist
3/30/2006 2:26 PM EST
URL: http://www.thestreet.com/p/rmoney/jimcramerblog/10276607.html
These homebuilders make it tough, don’t they? They run up in anticipation of the Fed — which makes no sense — and then the mortgage rates tick a nanofraction up and everyone freaks out.
Welcome to the world of limited downside. All these homebuilding stocks ever do is default to where they were. They never take out their lows anymore. I know many of you are concerned that the consumers who took down adjustable-rate mortgages will be crushed. Sure, there will be some fallout, but that’s why these stocks trade at 5 or 6 times earnings; there’s a lot of negativity priced into them.
I really don’t get what the deal is with the fears around this group. I believe that the 30 to 40 times earnings crowd or the 50 to 60 times earnings companies is where the rates worry should be placed. These long-dated asset plays get killed when rates go too high. That’s where you should focus, not the homebuilders.
Good grief!
THANKS! Why do people listent to this moron??
for the same reason they “listen” to Emeril Live. It’s just entertainment, not actual cooking.
I was trying to entertain my 20-month-old and he sat fascinated watching Cramer tonight. I was a bit worried about the Cramer geezer when he stuck a long knife through a pile of different houshold cleaners - I am sure there was bleach and ammonia mixing together there. He started to hold his hankee over his face and sprayed up his nose with “Little Noses” spray. Too funny.
Why do people listen to this moron?
Because themselves, are morons. It’s as simple as that. Mass media, big business, politicians, arms dealers, drug traffickers and real estate brokers cannot survive without morons. It’s their bread and butter.
LOL
Cramer is priceless.
And worth every penny
Another clown. They should dress him up, put some makeup and send him to Las Vegas with the “Cirque du Soleil”. Haven’t heard? They are going to make a new show about financial journalists. “The money bozzo’s.”
Larry Kudlow is an entertainer, and cannot be taken seriously.
He’s a smart-ass, know it all, and all his guest either tow his BS or he destroys them. CNBC deserves better, and I think he affects my view on their reporting.
LK is also a recovered (recovering?) coke-addict, something to consider, http://www.answers.com/topic/larry-kudlow
CNBC has done more damage to the economy than Ben Laden. It’s a sort of very subtle form of terrorism. The same kind that was practised by George W. Bush buddies at ENRON.
Lot’s of corporate news out there:
Furniture Co. on Monday reported lower second-quarter profit and cut its outlook for the year. Concern about a slowdown in the U.S. housing market and rising interest rates and gasoline prices have cast a cloud over furniture makers.’
‘Got a hankering for an Outback steak but the budget for a Big Mac? Apparently, many folks feel that way, as the slowing economy dulls the nation’s appetite for casual dining. ‘In the 12 years I’ve covered this industry, I don’t recall a downturn of this magnitude,’ says Lynne Collier, restaurant analyst at Stephens Inc. Nine of the 10 casual chains she follows have seen traffic decline in the past three months, she says.’
‘We’re going through a little indigestion here,’ says Peter Oakes, restaurant analyst at Piper Jaffray. ‘The days of build it and they will come may be over.’
I understand Target also had slow numbers.
The homebuilders ‘traffic’ index has been under 50 and has lead the overall index down all the way. The slide shouldn’t be a surprise considering that is the most forward looking part.
Two people can’t go for a decent meal anymore without spending $50 for something they could just as easily cook at home for a third of the price. Outback is mostly an expensive “gimmick” restaurant that serves hit and miss steaks. As people cut back they will switch to take-out foods to avoid paying the tips and then finally start cooking at home again. You start to cut back when the Honda Accord costs $45 to fill up and an SUV $80-100.
add in babysitting and a movie and it’s easily $100+ for a date night. hello eating in and netflix!
Ah…the American dream.
It’s not just the money - who wants to sit in a sticky chair in a crowded theatre when you can snuggle up with your hubby at home, raid the fridge, watch exactly what you want, have surround sound, and click “pause” when you need a pee?
$50!
You’ll laugh at this but I have never had a $50 meal in my entire life. We like the hole in the wall ethnic places. If two people can’t eat for $20 or less, we don’t go there.
A $10 plate of sushi for dinner would frighten me, and make me think that it was laced with e.coli.
So don’t eat sushi. That’s easy enough.
Sorry, “don’t eat sushi” isn’t an option.
Just remember, you can’t take it all with you…
The mother of all discretionary items, the $3 cup of coffee, is also on the wane and SBUX’s chart reflects the weakening consumer, IMO, http://stockcharts.com/gallery/?sbux
That tic-tac-toe game board at the bottom of the professional tea leave reader’s page looks ominous indeed!
Fat as Americans are, they should stop eating too for a couple of days.
She can’t remember any down turns because she’s a 29 yo perky know it all yuppy professional that’s been working in the field for 6 years, therefore she’s a ‘pro’. This liquidity bubble has gone on so long that even knowledgable people forget. The 70s were a long time ago, and the late 80s downturn wasn’t wide spread enough to really effect enough people. So of course the 24-45 crowd just assumes prices will double every year for eternity.
well some of us in the 24-45 crowd read this blog.
-31 and afraid for the future
34 and I remember the early 90’s in San Diego….we ain’t seen nothin’ yet.
I’m 28 and continue to be stunned at the sense of entitlement my peer group has. We had it good growing up and have yet to see a major economic downturn. Many people my age just don’t think it can happen to them. Fortunately, my parents spoiled me rotten
but not without teaching me the value of money. I know it sounds like an oxymoron, but we were very fortunate…
They are entitled to a good kick in the pants. That’s the problem with the money. It’s worth nothing. It buys less and less. And yes it’s called inflation.
35 and very afraid (I’m in the 2nd Great Depression camp)
That would be a contrarian signal that everything will be alright
Well, I am 32 and I am very afraid … I am a saver, married a saver and I just hope we come out OK.
anyone 40-45 graduated into a recession in the early 80’s and shouldn’t take anything for granted…
Don’t excuse the dumb a$$ boomers from all this. They, beyond any other age group, are the ones obsessed with RE. That is because all these people have ever known is spending $$ for themselves. And, when their thrifty parents die, all that money will be transferred to the boomers so, in effect, the ATM machine will never end.
I think the statistics show that there isn’t that much to transfer. At least, not enough to be significant in terms of the boomers’ deficit.
Many boomers’ parents have been handing it out to their kids for years, I don’t think there will be much left upon their death. I have seen many an example of this when my aunts and uncle passed on.
You are soo right with these “pro” that know nothing about the past. Nice expression “Yo perky know it all yuppy” are just little puppies, but they don’t know it.
Not sure how much the GSEs will be able to get back from the crooks.
A Fortress for Your Money
http://online.wsj.com/article/SB115292039334607541.html?mod=rss_markets_main
“Asset protection, or placing your money where it’s safe from lawsuits or creditors, was once considered a shady practice. Now it’s moving into the mainstream.”
“People who are vulnerable to a lawsuit, bankruptcy or divorce — and it’s a surprisingly big group, including doctors, corporate executives, business owners, real-estate investors and even families with teenage drivers — have grown increasingly concerned about protecting their property. Fanning the flames, financial-services companies and lawyers have been aggressively marketing complex trusts, partnerships, insurance products, limited-liability companies and other vehicles to move those assets out of the reach of others.”
“Trust companies offering so-called asset-protection trusts say that business is booming. NatCity Trust Co. of Delaware, a unit of National City Corp., says its asset-protection trust business has doubled over the past couple of years, while the majority of new trusts created at the Delaware office of U.S. Trust Co., a unit of Charles Schwab Corp., are now of this kind, the company says. “The vast majority of questions that I get these days” have to do with these trusts, says Richard Nenno, trust counsel at Wilmington Trust Corp.”
Allow me to translate…
“Stealing has become more mainstream”
Eating preferences may be shifting also. To me it’s telling that Olive Garden and Cali Pizza Kitchen are okay while Outback and Applebee’s are stumbling — the former offer vegetarian options, and the latter don’t.
The huz and I used to be the only vegetarians we knew. Not any more — and quite a few of our non-veg friends now ask us for restaurant recs because they’re more willing to go a bit beyond the meatwagon too.
Applebees is the equivalent of eating from the frozen dinner section in the supermarket. BanteringBear says YECH!
But they have very cold beer in very tall glasses :^)
Helpful for forgetting you are eating reheated frozen dinners, I am sure…
Consumer spending is already faltering?
Wow.
If consumer spending tanks, GDP will be clobbered, yes?
Consumer spending started faltering in late 2005. It’s been losing momentum ever since.
And yes, GDP is in trouble. Some people would argue that *real* GDP is already negative and falling. I am inclined to agree with this.
Correct me if I’m wrong, but won’t consumer spending continue to rise with energy costs, while retail spending slows? It seems with every hike in gas and evergy prices, we’re not spending any less, just cutting back from restaurants and the like.
Consider your self corrected, because the well is dry. Net consumer spending (in real terms) is falling.
And less disposable income.
it’s about time that people are waking up to the fact that paying $10 for a $2 chicken tender meal is a ripoff.
My single pleasure in life is going out to lunch and dinner a couple times a week. I’ve certainly noticed a drastic slowdown. It’s real easy to get a table compared to last summer.
“Home builders’ confidence plunged to a 15-year low in July. It’s the fastest decline in the 21-year history of the index ”
Probably will get better real soon though. Interest rates all but sure to keep going up, Median price ,and affordability through the roof, Oil at $78 ….Nah , good times ahead.
Couldn’t happen to a nicer bunch, their product is crap. Energy inefficient crap boxes fourty miles from nowhere. Stupidity rules the world.
Ack! I can’t spell anymore! The ignoramus osmosis is seeping into my brain.
maybe OT but are any houses built today of good quality & how do you tell.
Build it yourself.
Failing that, read some books on construction practices and visit construction sites in progress. Look for things like the wiring (is it stapled tightly and are the boxes stripped to precise lengths)? On an expensive house did they use 2×6 studs and put extra insulation in? Did they insulate the crawl space? What care is put toward the smaller jobs? If builders are working do they measure twice and cut once? Learn the codes in your area, are they just meeting them by a thumbnail or are they exceeding them? None of these are the be all indicator, but might give you a good impression of the less obvious items.
Unless you build yourself you can’t get a well-built house. They are all over-priced crap-boxes and they aren’t worth the money. Don’t pay top dollar for crap, that’s my advice. wait ‘em out. Do you really want to buy a house that was built by people who don’t give a $hit and can’t even read a tape measure? Wait until a house is 5-7 years old and most problems will be clearly visible even to the untrained eye.
“Unless you build yourself you can’t get a well-built house. They are all over-priced crap-boxes and they aren’t worth the money.”
That’s why I bought the home I grew up in. My dad designed and built it himself, with the help of my mom and my uncles. They all put their best into it. It’s small but sturdy and very energy-efficient. And everything I touch says ‘family’.
“That’s why I bought the home I grew up in.”
Who did you buy it from?!? Clearly you were not your parents’ favorite child…
Now that was just mean.
Houses will not be built “right” until the HB’s have the plans drawn up in Spanish!
Not all homebuilders are crooks. We just had extensive (and expensive) repair work done on our home & had a good builder. Some important characteristics; 1] a long-time local resident - born and raised in the area, 2] good references from people you trust, 3] all his work crew were local guys, no illegials, and 4] his crew filled out time sheets and were covered by workman’s comp. & insured.
#4 is the important one…if the builder hires workers worth covering, then the work performed is worth doing right.
No you are right. Only half of them are. Flip a coin.
Professional tea leave readers see bad news for major stock indexes…
http://www.marketwatch.com/news/story/DbxxjM8t236G0jBC0bnnlW6?siteid=mktw&dist=TNMostRead
The noose continues to tighten…
http://www.salemnews.com/local/local_story_199145230
Now we are fast approaching the conundrum stumper of 2000:
1). We lowered the interest rates some 15 times and people did not choose to accelerate the payment of their mortgages (to a fix 15yr) by refinancing but chose to take out equity or chose to play in a house flipping game for quick profit. Housing inflated.
2) Low interest rates hit senior citizens and retirees hard because low rates cut into their principle.
3) People bought houses on ‘How mucha month dat gonna cost me’ leaving no room for rising gas prices, mortgage resets, medical emergencies, etc.
4)Higher housing prices resulted in higher property taxes thus stretching the home buyer more and allowing the cities to increase spending.
5)Wages have been relatively flat for 4-5 years.
6)Now with all of the above, where or how is the consumer going to get disposible income? It’s gone to the HELOC, the mortgage company, the CC company, bills, etc and with very, very little disposible income and savings for the majority where does that leave the economy in 2007 and beyond?
7) You have to keep up rates to battle inflation and allow the retirees to make money on their savings. They are a big voting bloc, we can’t throw them out in the cold, we can’t have them go broke (we already subsidize their medical). We can’t have inflation or we’ll have to raise the minimum wage and we can’t keep doing that either.
8)What do we do about the housing bubble when it blows? Who’s gonna pay the bill? Most of the young flippers can be sacrificed because they have more years to recover, but what happens to the economy in the process?
9)When property backslides are we going to see new tax rates to prop up local governments or are we going to see salary cuts?
10) Who’s piece of the pie is safe and who’s in jeopardy but just doesn’t know it yet?
Salinasron,
You know, these are all good questions and this is the ideal time to roll them out. Back when we were agonizing (or trying to explain) is there or isn’t there a bubble these important issues took a back seat when they should have been front and center! Not to go you “one better” Ron but one I would like to add to your list is how will FB’s be treated by the tax man in 2007 and beyond? Last time I looked one can only “write off” 3K per year in cap. losses. Uh, right now some people that bought in 2005 are losing that much by the week! Will there be a big cry out from FB’s and specuvestors want to accelerate and expand that? Wouldn’t that basically be a “get out of jail free card” for FB’s?
isn’t it also kind of creepy that the BK laws were just made stricter? I mean, if that doesn’t show someone foreseeing all this…soon we will have no middle class, just a permanent debtor class.
who to hate more, the CC industry or the Realtors? or someone else.
Not going to happen. Think of all the people with losses from the tech bubble. They actually floated the idea of raising the 3k to 10k (about where it would be if it had been indexed to inflation), but it never went anywhere.
The two o’clock gravy train, right on time:
http://www.marketwatch.com/tools/marketsummary/default.asp?siteid=mktw
Starting to become a regular occurance. I’m waiting for the day the train comes late, or worse, doesn’t show at all.
Feds say that banks’ futures tied too closely to real estate
don’t get excited.
(”the proposed guidance is too vague, too simple and too broad, say some community bankers.
“Don’t paint all the banks with the same brush,” says Alan Rowe, president of the First Commercial Bank of Florida. “We already have very vigorous standards in place with risk-based capital.”)
anyone know the exposure of this bank to risky FLA bubble loans?
Like I mentioned before, I’m surprised how well the stock markets have held up the last 2 days, and baffled why gold has fallen $40/oz with what is going on in the middle east. I guess people worldwide still really believe in the USD during times of crisis.
They won’t when BB and co pause in August. I really think they will. BB is about to have his ass handed to him tomorrow in front of Congress, who is too worried about being re-elected to give a shit about the average American’s plight against stealth inflation.
http://tinyurl.com/zexlg
Stay away from Paris, France then, Paris Texas might be ok.
As a relative newcomer to the US, I’ve been astounded at how low you set the bar for home construction. Where I come from all houses are at brick throughout, including interior walls, and soldily plastered. Upper floors are set on concrete slabs. Roofs are tiled, slated, or thatched (very high insurance premiums for thatch). These are not the houses of the rich, just normal building code structures.
This kind of construction can last for hundreds of years and is naturally cool in summer and pretty well insulated in winter.
How do Americans justify paying such enormous prices for houses made of composite board and plastic? Can’t the world’s richest nation do better?
America is the land of the quick buck. Cheap labor, cheap materials, nothing is energy efficient or built to last. I have been around the construction industry for many years, trust me, standards are a joke.
Energy efficient? Of course not, that would raise the prices up even higher!! As a society we only look to short term benefits and cost-minimization, without any thought that spending $1000 extra now will save $50 a month in perpetuity.
The real problem is that our infrastructure is built around wonton waste and we will be stuck with massive drains on national resources for years. I’m not an enviro, just an economics study.
Disposable society.
“Can’t the world’s richest nation do better?”
The current public debt of America is $8,423,228,089,992.32.
Whoops, make that $8,423,228,752,708.88.
Whoops, make that $8,423,229,454,408.76.
If you use “classical accounting”, the deficit is 65 trillion dollars. 8,4 trillion is the deficit number with “the pay as you go” system. These numbers mean absolutely nothing. Economics, finance and accounting are a joke. It’s not important. Don’t worry. Be happy!
Here in Earthquake Country, we refer to brick homes with slate roofs as “deathtraps.” Wood frame is the only affordable way of weathering an earthquake — the too-expensive alternative is steel.
Also, there’s preciously little advantage to building a house that can last for centuries when you live in an area where termites will eat it in one hundred years or less.
As energy costs rise and long-distance commuting becomes esentially impossible, many American suburbs will become ghost towns. There would be no great advantage to building extremely durable housing in them.
We’re not the world’s richest nation anymore…just the biggest debtor nation the world has EVER seen.
Old habits die hard.
http://tinyurl.com/zexlg
They won’t after BB and Co pause in Aug. I really think they will pause after Bernanke has his ass handed to him tomorrow in front of Congress, who is too worried about being reelected to give a shit about the average American’s plight against stealth inflation. It’s my opinion that if he pauses he loses all credibility, and if he keeps going he pisses off everyone. He’s too new and too unclear to start off on the wrong foot with everyone who is begging for a pause. A break in August and then a .5 hike the next go-round, but I hope I’m wrong.
The Fed chairman cannot possibly hope to build a reputation for political independence if he easily bows to congressional pressure as you suggest he will. The only way he could possibly pause in August without reputation repercussions would be if inflationary pressures were clearly waning (they so far are not) or the economy were clearly slowing (it so far is not).
Anyone see the article in the WSJ today about how gas guzzlers are still selling well with no apparent effects from gas prices?
I can’t help but think this will end with the bubble bust. Maybe people are buying to keep around as a self-contained living unit when the McMansion is foreclosed?
http://online.wsj.com/article/SB115318254996509296.html?mod=todays_us_personal_journal
Housing and consumer comments:
http://www.xanga.com/russwinter
I find this comparison chart intriguing.
All of the those homebuilder stocks moving in almost exactly the same way?
Which fund is driving the homebuilder stocks?
Considering there is no national real estate market, only local markets, and these builders obviously have different weights of construction activities across the US landscape, the degree of correlation across the stocks in this sector is and has been phenomenally high for some time — part of the conundrum in my opinion (the market does not correctly price in fundamentals, especially risk). I read recently that certain hedge funds have been big buyers of the HB stocks, and that might help explain their regular tendency to rocket up in sync on absolutely no news whatever, nor any change in the fundamental picture.
Props GetStucco!
I know how hard it was for you to keep from breaking out that tinfoil hat as you were typing that…keep up the good work!
PS - whenever one particular stock get’s alot of bids they tend to carry the whole sector up with them….and vice versa. Been that way since the stock market was invented.
I know how easy it was for you to break not bother to break out out the spell check and grammar check or to hit the shift key. Keep being lazy.
That’s interesting GS … do you have a link? If they bought at the same time, would it make sense for them to sell off at the same time as well?
The correlation of the local peaks and valleys, both in timing and characteristic, is really quite astounding. It’s one thing for stocks of a sector to trend as a group in a particular direction, but short term variations of the same character at the same time seem to imply the existence of either a large player or several large players moving in lockstep.
http://online.wsj.com/public/article/SB115300002986107884.html?mod=sunday_journal_primary_hs
[sarcasm]Can someone inform the builders out there to keep building? Afterall, home prices are setting new records, and they’ll make money![/sarcasm]
I’m just trying to see that I get enough choice, when my turn comes