The NAHB (National Association of Home Builders)/Wells Fargo National Housing Market Index came out today with a small uptick to 15 from last months dismal, and near record low read of 13. Basically, the housing market is still “flat line” at the current time as credit conditions are still weak, foreclosure activity is held up and consumers are either trapped with poor credit or are more focused on paying down debt rather than taking on new debt.
The month’s gain was centered on “expectations for future sales” where the component jumped an extremely sharp seven points to 22. However, this is a very mushy metric to be betting on as individuals always have an eye to purchase in the future if the right conditions exist at at these levels it doesn’t take much to move the meter. The more important number to look at was “current sales” which rose only a very modest two points to 15 while traffic is unchanged at 12 showing the real weakness that persists.
Despite June’s gain, the index has held within a depressed three-point range for nine of the last 10 months and remains entrenched near historic lows on the index and at levels that are normally associated with recessions. There is more data coming out this week from home starts to purchase applications. We expect all of them to show modest upticks due to it being summer months, as it traditionally a stronger buying season, and since mortgage rates have dropped since the end of QE 2.