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.

Homebuilders remain cautious, as rising mortgage rates and persistent unemployment weighed on hopes for a speedy recovery in the battered housing market. Today’s National Association of Home Builders/Wells Fargo index of builder confidence fell to 15, down from 16 last month, according to Bloomberg. Analysts expected the reading to come in at 17.

The NAHB chief economist, David Crowe said “The housing market continues to bump along trying to find a bottom. Builders are taking their cue from consumers, who remain uncertain about the economy and their own situation.”

As discussed at length here at Cirios, buyers should largely ignore calls in the media and real estate industry for a housing market “bottom.” Markets do not bottom at once, so a bottom in nationwide housing data will mean little for individual markets. At Cirios we do street-level, house by house analysis to identify micro-trends within local housing markets — have a question about your market?

Contact us today for a free consultation!

Housing market optimists picked up another bullish datapoint this morning, as the National Association of Homebuilders (NAHB)/Wells Fargo builder confidence index rose to 16 from 14 last month. According to Bloomberg, that’s the highest reading since last September.

So what happened the last time builders felt this good about their prospects? Lehman Brothers went belly up, Washington Mutual and Wachovia collapsed into the arms of JP Morgan Chase and Wells Fargo, respectively, and the financial system nearly imploded. Sure, history is unlikely to repeat itself, but using this measure to try and predict the future is like trying to predict the weather 6 months in advance: An experiment in futility.

According to NAHB Chairman Joe Robson, “Builders are responding to what they perceive to be some of the best home buying conditions of a lifetime.” Here, Robson is echoing his sentiments from March and April, even as property values continue to fall.

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.”

Conditions in the world of building new homes remains poor to quite poor. The National Association of Homebuilders (or NAHB), the industry lobbyist group, released its monthly builder confidence index this morning, which registered a near-record low reading of 9. Sentiment was unchanged from last month, which matched analysts expectations.

The builder group is hopeful the market loosens up in the coming months, ending almost 4 years of rotten building conditions. Likewise, I am hopeful to find a bag full of money on the streets of San Francisco, somehow passed over by the swarms of transient, unemployed investment bankers scrounging Market Street for scraps, ending almost 4 years of rotten personal financial conditions.

The NAHB also made the bold statement that they believe the housing market will bottom around the middle of this year. This estimation is based primarily on the aforementioned statement that they hope the market will loosen up. There is little evidence the housing market is approaching a bottom, as prices are now tumbling in virtually every region of the country.

Anecdotal evidence of the challenges facing homebuilders mirrors the industry’s sentiment reading.

Banks are literally giving land away for free, but the economics of new construction are so upside down that builders are turning it down. The carrying costs – primarily fees paid to municipalities – are so high the land isn’t worth the price: Nothing.

One of the first signs of a housing turnaround will be when builders begin acquiring vacant land. Until this very modest indication of confidence is seen, the bottom will remain elusive — hope notwithstanding.

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 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 RYAN TAYLOR

Just when you thought the market for new homes couldn’t get any worse, it did.

The National Association of Home Builders (NAHB)/Wells Fargo January builder sentiment index dropped to 8 from 9. While the homebuilders were setting records for new home sales in 2005 and 2006, they’re now setting records for the lowest confidence on record, as 8 breaks last month’s record low of 9.

The homebuilders are very clear on what needs to happen to bring back their confidence and revive the market for new homes (Hint: It has nothing to do with building homes that people want to live in for the right price.)

“Conditions in the nation’s housing market aren’t getting any better, and they aren’t going to get any better until the federal government takes substantial action to encourage qualified buyers to get back in the market.” NAHB Chairman Sandy Dunn said.

One of the biggest reasons we are in this housing crisis is that builders put millions of buyers in homes they couldn’t afford. Through questionable relationships and kickbacks, builders partnered with lenders to encourage buyers to stretch beyond their means. This common practice during the boom created a massive over-supply of homes which has yet to be worked through.

As a result, homebuilders are left with basically two choices – 1) offer homes at prices that are reflective of the current market conditions or 2) do not sell any homes and plead for Uncle Sam to help them.

Needless to say, they’re not going for option number one because it will put most of them out of business. Furthermore, the NAHB seems delusional on why people are not buying their homes.

“Qualified buyers are clearly in the wings but they’re looking for a significant signal from the federal government that now is the time to return to the market” NAHB Chief Economist David Crowe said.

This statement makes the assumption that qualified buyers are not in the new home market because the government needs to give them some kind of divine signal to know when to buy. As an alternative explanation, I think qualified buyers are not buying new homes because they’re far away from job centers, listed above market and were built by companies that frequently stop work on projects halfway through– existing residents be damned.

Until one of the major publicly traded home builders goes out of business, we are not near the bottom in the housing cycle.

By RYAN TAYLOR

It’s still a lousy time to be selling new homes.

The National Association of Home Builders, or NAHB, shared its sentiment index for December, which remained at a record low of 9. The index is based on 426 residential developers nationwide; a reading below 50 reflects negative sentiment. In addition to the general index number, confidence levels for current sales dropped to 8 from a reading of 9 last month. The six-month sales forecast dropped from 18 to 16. To say confidence remains extremely low is a bit of an understatement.

The NAHB sentiment index number is an important gauge of the health of the overall market. In many of the hardest hit areas of the country, there remains a glut of housing supply – particularly new construction. Homebuilders are aggressively cutting prices, which is adding to existing downward pressure on prices caused by foreclosures. Since new homes are often more desirable than existing homes, watch any strength in homebuilder sentiment as a prelude to possible strength in the broader market.

While many prognosticators are starting to believe we’re moving into a bottoming phase in the housing market, the chief economist of the NAHB, David Crowe, remains unconvinced:

“We have seen no improvement over the past month in terms of sales conditions for new homes. In fact, certain factors have gotten progressively worse, not the least of which is the job market, where massive layoffs are having a devastating effect on consumer confidence.”

The sobering reality of the housing market is that its recovery has been postponed due to the global recession and the resulting job losses. Despite aggressive moves by the Treasury Department and Federal Reserve to lower interest rates and spur demand, people without jobs simply do not buy houses.