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Takeaway: Builder sentiment held at 10-month lows in April. Forward expectations bounced +1pt, but remain well below their Oct 2015 highs.

Our Hedgeye Housing Compendium table (below) aspires to present the state of the housing market in a visually-friendly format that takes about 30 seconds to consume.

BUILDER CONFIDENCE | Suspended Animation - Compendium 041816

Today's Focus: March NAHB HMI (Builder Confidence Survey)

Builder Confidence in April was static at 58 against unrevised March estimates, holding at 11-month lows for the third straight month and marking a 6-month past the cycle peak of 65 recorded in October.

Across the Survey Indicators, Current Sales moved lower from 65 to 63, putting in their lowest reading since May of last year. Meanwhile, there was a +1pt gain in Forward Expectations and also a +1pt gain in Buyer Traffic, but both those surveys remain below their LTM averages.

Regionally, all four US regions posted sequential declines. The Northeast and West both fell -2pts, while the Midwest and South each registered -1pt declines. 

Commentary was largely generic, referencing jobs and rates as broadly positive for the fundamental backdrop:

NAHB CEO Robert Dietz:  “Builders remain cautiously optimistic about construction growth in 2016. Solid job creation and low mortgage interest rates will sustain continued gains in the single-family housing market in the months ahead.”

In short, nothing particularly remarkable in the April release as Builder Confidence remains past peak and the larger demand trend across both the new and existing markets remains one of deceleration. 

Looking to March Housing Starts data tomorrow, we expect the number to remain strong from a rate-of-change perspective as we lap the depressed, severe weather comps from last February/March.  

Looking more broadly at both US Housing and the US Economy, they could best be summarized as a whole lotta “not much” going on at present.  


BUILDER CONFIDENCE | Suspended Animation - NAHB LT

BUILDER CONFIDENCE | Suspended Animation - NAHB Regional

BUILDER CONFIDENCE | Suspended Animation - NAHB Survery Indicators 

About the NAHB HMI:

The 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 monthly survey has been conducted for 30 years. The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next 6 months as well as the traffic of prospective buyers of new homes. The HMI is a weighted average of separate diffusion indices for these three key single-family series. The HMI can range from 0 to 100, where a value over 50 implies conditions are, on average, improving, a value below 50 implies conditions are worsening, and an index value of 50 indicates that the housing market is neither improving nor worsening.

Joshua Steiner, CFA

Christian B. Drake