| | | FWIW- I don't see any more fed increases. IMO-From here on the US economy moving forward will deal with a higher floor base in interest rates. Some of the speculative appeal has been taken out of the stock market more recently. That also applies to Bitcoin.
Home builder confidence tumbles the most since 2014 as housing headwinds catch up
Published: Nov 19, 2018 10:00 a.m. ET
Sentiment didn’t fall this sharply from one month to another even during the worst of the housing crisis
By
Andrea
Riquier
Bloomberg News/Landov
Contractors work on a KB Home project. Builders have started 6.4% more homes so far this year than in the same period last year.
The numbers: The National Association of Home Builders’ monthly confidence index plunged eight points to 60 in November.
What happened: The many headwinds that have been dogging the industry finally showed up in this report. Labor is still expensive, lots are still scarce, lumber is at the mercy of tariff politics, and now, mortgage rates are rising and customers are holding back.
NAHB, the building industry’s Washington lobby, noted in a press release that the reading of 60 is still “positive,” but that “customers are taking a pause.” The eight-point plunge is only reminiscent of the nine-point drop just after the 9/11 attacks and one other instance, a 10-point drop, in early 2014. The overall reading is the lowest since mid-2016. November’s results badly missed the Econoday consensus of a flat reading.
In November, the sub-gauge of current conditions fell seven points to 67, the tracker of expected future conditions plunged 10 points to 65, and the gauge of buyer traffic was down eight points, to 45.
Any reading over 50 signals improvement.
Also read: Housing starts lurch lower in another weak month for residential construction
Big picture: The gauge of builder sentiment has long been considered an early read on the pace of construction, an important economic indicator considering how desperately more new homes have been needed.
But such a sharp drop may presage something more sinister than a slower pace of building. Home builders were one of the first groups to feel the top of the market cycle just before the Great Recession. In June 2005, NAHB’s index hit 72, its cycle high. It started to tumble the next month, and by mid-2006 stood in contraction territory.
To be sure, builders may not be the canary in the coal mine now as they were a decade ago. And many economists have called the top of the housing cycle already. Still, such a sharp drop can only seem ominous.
What they’re saying: Moody’s Investors Service on Monday downgraded its outlook on the U.S. building materials industry, saying that “private residential construction growth is decelerating.”
Market reaction: All the headwinds that builders have been complaining about may already be baked into big-company stocks. Shares of D.R.Horton, Inc. DHI, -0.79% are down 32% in the year to date, while KB Home KBH, +1.58% shares have lost 41% in that time.
marketwatch.com
I personally don't think the economy is overheating and inflation is still under control.. The way I see it. Just from what I just posted about my personal AR loan. Homeowners with adjustable rate loans and adjustable home equity loans are seeing increased payments. IMO That makes you want to pay down debt faster. This if your able to with any windfall you might have received from tax cuts or bonuses workers many companies paid out via a lower tax rate. Housing- Based on home-building stocks which have undergone increased expense due to higher commodity cost. The US Housing market is already slowing, increased interest rates are part of the equation. Automotive- IMO that market is already slowing. Credit Card debt- I just love the new TV commercials I've seen about credit card debt.. I can't think of the company name airing them off hand, but they increase awareness about credit card debt. The one I've see. Stating by the time I pay off my credit card debt. I will basically be paying double from my purchase. I've also see similar commercials about student loan refinancing. I also see the new tariffs and purposed new ones slowing the economy and lowering inflation prospects. Oil- OPEC indirectly has to deal with US Oil & Gas independents now. IMO because they are a force now, especially with LNG exports ramping up. I also see the Saudis are upping their Cap-X exposure to natural gas. Petrobras has recently sold oil leases to pay down debt. IMO I see oil going lower down the road and lower food input cost if tariffs are fully imposed.
P.S. I believe such factors I mentioned will kick the US economy can down the road. If the IMF is worried about US fiscal policy then maybe they should establish a no tariff world economic forum summit for consideration. If the dollar stays strong. I think you will see more foreign investment in the US market. |
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