19 June 2001, 11:24 Up, but no upward momentum
By Mark Serlin
Washington, June 18 (BridgeNews) - As is the case with: 1) the Conference
Board's index of consumer confidence, 2) the University of Michigan measure of
consumer sentiment, and 3) the ABC/Money Magazine measure of consumer
confidence, the latest readings from the National Association of Home-Builders
show builder SENTIMENT going sideways near the lows for the recent move down.
While the June NAHB index (and 2 of the 3 sub-indices) moved higher on the
month, no new ground was broken on charts, the gain serves only as "noise"
within a sideways range, and longer-term downtrends remain in effect.
The overall index advanced to 58 from a downward revised 56. That 2 point
overall increase was the result of a 3 point gain in the current sales
sub-index (59% of the overall index) to 64, a 1 point increase in the 6-month
sales outlook sub-index (14% of the total) to 67, and an unchanged reading in
the traffic sub-index (27% weighting) of 42.
PERHAPS THE MOST NOTEWORTHY DEVELOPMENT IN THE HOUSING DATA IS THE
DIVERGENCE BETWEEN THE NAHB INDEX AND THE NEW PURCHASE INDEX FROM THE MORTAGE
BANKERS ASSOCIATION. WHILE THE NAHB HAS BEEN TRENDING LOWER FOR THE BETTER
HALF OF THE PAST 2 YEARS, THE MBA PURCHASE INDEX HAS RECENTLY SET A NEW HIGH
FOR THE CYCLE.
We suspect some of the relative builder pessimism is the result of builder
specific problems that are weighing down the NAHB. However, the MBA purchase
index appears to be benefiting from both generally low interest rates and a
move by some investors out of the stock market and into real estate.
Should the latter positive fundamentals continue, we suspect it is only a
matter of time until builder sentiment improves.
Looking ahead on the housing front, attention will now shift to tomorrow's
release of housing starts and building permits. The NAHB and construction
industry aggregate hours numbers set a neutral to positive tone.
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