I’ve come across quite a few fascinating Housing charts over the past week.
Taken together, they tell a tale of sector that has yet to see a bottom. And I suspect the economic impact has yet to be fully felt:
Housing is not getting better anytime soon: This is
an survey discussion asking about various apsects Builder’s Businesses.
Its bad enough that the Index (HMI) in May dropped 3 points to 30. It
was bad across the board — but the real ugliness was in traffic of
potential buyers — that’s a leading indicator to Builders as to how
much product they will be moving — It dropped to 23. In the heart of the selling season (survey data was done in May).
NAHB Housing Index
Chart courtesy of NAHB
Starts and New Permits are still dropping rapidly. Given all the excess inventory, this is actually the silver lining in the slowdown.
Chart courtesy of Northern Trust
points out that new Housing construction has now slipped to around 1.5 million units –
that of a normal, growing economy. Expect housing starts generally
to about 800k to 1 million units before a rebound is seen.
The DJ Real Estate Index is a potential 20% loser from here, based on the Head & Shoulder topping pattern:
Chart courtesy of Mike Panzner
What does this mean to the economy? The clear implication is that consumer spending willr meain pressured, and retail stocks — excepting the Luxe goods — will continue to have a difficult environment.
Builder Confidence Slips Again In May
NAHB, May 15, 2007
NAHB/Wells Fargo Housing Market Index (HMI)
Two Markets Diverging
WSJ, May 16, 2007, 4:10 pm
Its apparent from yesteday’s Earnings release that the impact of Housing is working its way into the earnings picture. So far, the impact has been very specific, and limited to Retail (Home Depot, Circuit City), a few Transports (Yellow Roadway, UPS), and of course the Home Builders. Thus far, Financials have contained the impact of sub-prime, but are seeing originations and loan volumes fall.
Here is a quick round up of where else Housing is impacting the economy, via RGE: