Today’s report shows that we are in a crisis situation.
When I heard Diana Olick report this number on CNBC a few minutes ago I had to chuckle. You have to realize that a number greater than 50 indicates that more builders view sales conditions as good than poor. 9 is ….. not so good. In fact, it’s the worst number in the history of the index dating back to 1985 (NAHB Confidence Index Chart).
You can see from the chart that confidence bottomed around 20 during the 1990-91 real estate bust. 9 is a depression type of number and housing is clearly not in recession but depression.
But when you get this kind of number, you have to start thinking that if the bottom isn’t in it’s close. The number is based on homebuilders perceptions of current conditions, current traffic and expectations for the next 6 months. What this number tells us is: nobody is buying new homes right now and very few are even looking.
Sentiment towards housing couldn’t be worse among potential buyers. That also means that there are some unbelievable deals out there to be had. Homebuilders are desperate to sell their inventories and recoup some of their costs.
This kind of thing makes me want to head out to the nearest development and start looking around.