The bounce rolls on. This morning, US Homebuilders gave their most positive outlook on the market in the past 12 months, as the National Association of Homebuilders/Wells Fargo Housing Market Index ticked up to 18, from 17.

To be sure, 18 is a dismal reading, but builders appear to see a light at the end of the tunnel. The question, of course, is whether that light is the end of the tunnel, or a train.

NAHB Chief Economist David Crowe echoed the positive sentiment:

“There is definitely a sense of hope among builders that the worst of the downturn is over and that a turning point is near at hand. Meaningful action by Congress could ensure that this upward momentum continues and that housing can help push the economy back onto solid ground.”

Builders have slashed prices to keep up with falling property values, as first time homebuyers and investors alike snatch up bank owned homes at what they perceive to be firesale prices. And with the current limited supply of foreclosed properties on the market, eager buyers may once again be turning to newly built homes.

Things are looking up for US homebuilders — or at least they think so.

The National Association of Homebuilders/Wells Fargo Housing Market Index registered a 17 this month, its highest level since September of last year. The measure jumped from 15 in June, after hitting a low this past March of a measly 9. Anything below 50 is an indication builders are pessimistic, so we still have a long way to go before optimism reigns in the world of building houses.

NAHB Chairman Joe Robson, while encouraged by the current environment, was sober about the reality for a meaningful rebound in housing:

A true recovery in the housing market and overall economy cannot take place until the continuing foreclosure crisis is abated and a decent flow of credit is restored to housing production,” Robson said.

Meanwhile, the stalled jobs market is a major concern to builders and potential home buyers alike.

Indeed. Buying activity is certainly strong in some markets, but its unclear how long this wave of buying can last, given the weak economic backdrop. Foreclosure moratoria can only keep supply off the market for so long.

New Home Sales in March came in higher than expected, even as prices fell from this month last year. According to Bloomberg, the Commerce Department reported that builders tallied sales last month at an annual pace of 356,000, down just slightly from February.

Inventories dropped to the lowest level in 7 years, while prices dipped to levels not seen since December 2003.

Without a doubt, lower inventories and sales activity that is becoming somewhat less abysmal than before is a good sign for homebuilders, who saw their stock prices jump today. Lennar (LEN) popped 14.99%, Hovnanian (HOV) rose 10.75% and Pulte Home (PHM), who recently announced plans to buy Centex (CTX), finished higher by 7.34%.

At the risk of being labeled perma-bears, while the news was cheered by most industry experts, that doesn’t mean builders will begin breaking ground any time soon on new developments. And since homebuilders make money by, well, building homes, the group still isn’t out of the woods. As prices keep falling in line with broader measures of home prices, building houses will remain a non-economic enterprise for the foreseeable future.

When will that trend reverse? While it’s anyone’s guess, a good sign would be when builders start buying finished lots that currently can barely be given away for free.

Echoing similarly rosy readings from other segments of the housing market, Homebuilder confidence jumped in April to 14 from 9. According to Bloomberg, this is the biggest jump since May 2003. Economists, which continue to be lost in the woods when it comes to predicting housing data, were expecting the index to come in at 10.

Much has been made of the recent spike in home sales, which many pundits and so-called real estate experts are pointing to as a sign of an imminent bottom in the housing market. Evidently, homebuilders are drinking the same cool aid.

David Crowe, chief economist at the National Association of Homebuilders, said today “This is a very encouraging sign that we are at or near the bottom of the current housing depression. Some of the most favorable buying conditions in a lifetime are now in place, and they are drawing more consumers back to the market.”

As housing prices continue to spiral downward, foreclosures flood the market and job losses rise, we boldly question this assertion. To be sure, there are deals to be had, but by in large most homes in this country remain overpriced.

As one senior economist told Bloomberg, “Builders are generally a hopeful bunch, so it is no surprise that the stabilization in the broader economy fed through to the confidence index. We would only caution that hope is a soft foundation.”

Or, to quote Todd Harrison from Minyanville.com, “Hope is not a viable investment strategy.”

By RYAN TAYLOR

The National Association of Home Builders, or NAHB, released its confidence numbers for February this morning and the reading unexpectedly rose to 9, up from 8 in January. 8 is the lowest level the index has ever reached.

This surprise increase is not exactly a reason to start popping champagne and celebrating the bottom of the market for new homes: Sentiment is not deemed positive until it climbs over 50, so we have a long way to go before it is time to be optimistic.

“The market for new single-family homes remains very weak at this time,” NAHB Chairman Joe Robson said.

While the NAHB is rarely as misleading as the National Association of Realtors, these comments are far from reassuring. The basic reasons for the increase in the sentiment were increases buyers traffic and the blind hope that the $789 billion stimulus package would help turn the economy around.

“Looking forward, we are certainly hopeful that the newly passed economic stimulus bill, which includes some favorable elements for first-time home buyers and small businesses, will have a positive impact that will help get housing and the economy back on track,” said Robson.

In a more muted recessionary environment, we believe the $8,000 tax credit offered to first-time home buyers would have a significantly positive affect on demand. However, the economy remains quite weak and we believe most first-time home buyers are going to have a hard time buying homes since so many either A) no longer have a job or B) have seen their wages curtailed.

Finally, new home sales will continue to be hurt by the ever growing prevalence of REOs on the market. Given the fact that numerous banks are keeping many of their REO properties off the market, we do not foresee competition from REO properties being eliminated in the foreseeable future.

Buying a new home remains a risky proposition.

By RYAN TAYLOR

The National Association of Realtors announced yesterday that the median home price in the US fell by 12% from a year earlier. Not surprisingly, the fall in prices was driven by the ever increasing number of foreclosure sales which accounted for 45 percent of all transactions.

The pressure on prices is only increasing as job losses mount around the country. The US lost 2.6 million jobs in 2008 and has lost more than 600,000 already in 2009.

While we may sound like a broken record, we continue to believe that buying a house right now is a risky proposition. Unless Washington comes up with a plan where they make housing payments for unemployed workers (not terribly far fetched given the announcement yesterday to subsidize mortgage payments), the housing market will decline because job losses equal a decline in home prices.

The reality is that the pent-up demand often cited by homebuilders and Realtors is fading due the increased uncertainty in the broader economy. A trend being seen in previously strong markets throughout California is that potential buyers are holding back to due to uncertainty about their jobs. Even those with steady jobs are content to wait — houses will almost certainly be cheaper next month, and the month after — why buy now?

Furthermore, most of the homes on the market today are listed at prices that reflect an environment where demand remains strong. By in large, it’s not strong. Sellers will be forced to recognize this and slash prices — but this takes time.

Of course, the government will be working around the clock to speed up the demand process and you can trust that Cirios Real Estate will keep you informed on the latest developments in the market.

By ANDREW JEFFERY

This post first appeared on Minyanville.

Our elected officials appear convinced that Americans should buy stuff they don’t need with money they don’t have.

The Senate, in passing its version of the over $800 billion economic stimulus package yesterday, threw a great deal of cash at 2 industries whose products we have far too much of already. Despite the fact that we have too many cars on the road and far more homes than we do people to buy them, lawmakers are determined to prop up both the auto-making and home-building industries.

According to Bloomberg, Ford (F), General Motors (GM) and Chrysler, the latter 2 already suckling the government teat just to stay alive, will benefit from a provision that allows consumers to deduct car-loan interest payments and local sales taxes from their income tax.

Meanwhile, Centex (CTX), DR Horton (DHI) and other homebuilders are salivating at the prospect of a $15,000 tax credit for those brave enough to buy a new home. The new, more generous tax break replaces a $7,500 credit granted last year.

In what shouldn’t come as a surprise, Brian Catalde, the president of the National Association of Homebuilders (or NAHB) is pleased that his group’s intense lobbying efforts paid off.

“We’re pretty happy with the way the Senate bill is shaping up,” Catalde said. “We think it will entice a lot of those people sitting on the sidelines into the marketplace.

”NAHB members nervously await the disposition of the final bill as their balance sheets remain bloated with unsold homes priced well above prevailing market prices.

Lawmakers seem determined to dig our way out our debt problem with yet more debt. By encouraging Americans to borrow more to buy the cars and homes irresponsibly manufactured by these industries in the first place, Congress and the President alike reward the very poor financial decisions that brought our economy to its knees in the first place.

To borrow the analogy from Professor Succo’s piece yesterday, Economy: Code Blue, this is akin to handing an obese person a donut, telling them to munch away as long as they stay away from pizza. It just doesn’t make any sense.

Among the Senate bill’s numerous differences from the House’s version passed last week — most notably the handouts earmarked for homebuilders and automakers — it also excises more than $20 billion in funding for new public-school construction.

Once again, lawmakers display their unparalleled financial acumen: Only more McMansions will counteract the vast oversupply of schools this country is struggling to get out from under.

By AUSTIN NELSON

Housing starts in the U.S. fell to their lowest levels since the government started keeping statistics on the subject in 1959. The drop is staggering — almost 20% since October — and is another stark indication of the current state of the U.S. housing industry, not to mention the economy as whole.

As noted ad nauseum on this site, supply far outstrips demand in most of the country’s real estate markets. Homebuilders are being kept busy simply trying to sell the homes they’ve already built, tens of thousands of which sit empty where they stand, surrounded by bank owned properties and uncompleted projects. There is simply not enough demand to support continued building.

Housing starts will likely continue their decline as large nationwide homebuilders contract their operations and some even close their doors. The homebuilding industry will struggle to improve until unemployment eases, lending standards loosen up and the flood of foreclosed properties recedes. It will be years until we see these events unfold.

In the meantime, savvy investors and prospective buyers will stay far away from the remote suburban housing developments that litter the outskirts of our major metropolitan areas. While these houses are often huge and full of top quality amenities, they’re simply too far away for any but the retired and semi-retired to reasonably consider making their home.

Services are already spotty in these areas, and as the nation as a whole becomes more eco-conscious and fuel costs emerge from their current swoon, demand for McMansions in the exurbs will remain low, perhaps indefinitely.

The S&P/Case-Shiller home price index is out today, showing a continuation of the downtrend in property values. Data from August — two full months before the financial crisis spun out of control — shows weakness across the country:

• Prices fell in August for the 25th consecutive month
• Prices in 10 major markets plunged a record 17.7% year over year
• The biggest declines in August were seen in San Francisco (-3.5%), Phoenix (-2.9%) and Las Vegas (-2.4%)
• The biggest declines year over year were seen in Phoenix (-30.7%), Las Vegas (-30.6%) and Miami (-28.1%)
• No metro area showed a price gain in the last 12 months.
• The best performing metro areas in the last 12 months were Dallas (-2.7%), Charlotte (-2.8%) and Boston (-4.7%).

Data continues to show that home prices are not approaching a bottom. Also, since contracts signed in the past month for home sales will not show up in the data until early next year (1-2 months escrow, 2 months lag in reporting), it’s pretty safe to assume data will be bleak for the foreseeable future. Calls for stabilization, especially after yesterday’s “better than expected” new home sales figures are premature.

The continued drop in home prices is further evidence that when considering buying a home in this market, one must be prepared to live there for at least five years. Trying to pick the bottom is a dicey proposition for everyone but the most savvy, well-capitalized investiors.

Most anyone who has bought a home in the past few months (or even years) has likely lost money on his or her investment. Add in the effect of leverage, and losses will be quite severe if homeowners are forced to sell.

It’s important to understand that the Case-Shiller index is not released by Realtors or Homebuilders, spinning data to try and persuade people it’s time to buy, or that Congress needs to increase handouts to prospective buyers. The data is simply produced to evidence the prevailing trends, in whichever direction they may be headed.

Finally, keep in mind that data from the “San Francisco” metro area, for example, includes data from the entire Bay Area. This means Oakland, Brentwood, Vallejo and other hard-hit cities are lumped together with Palo Alto, Hillsborough and other cities that have held up rather well. Attempts to make generalizations about homeowners in a particular area based on this data is misguided at best.