If the home builders are nervous, what does that mean for the rest of us?
Continue Reading Add comment November 19th, 2008
The builders are about as pessimistic as they’ve ever been. Yesterday, we learned that the National Association of Home Builders/Wells Fargo Housing Market Index, which tracks builder sentiment, fell to a record low of 9 in November (sinking from an already low 14 in October).
Today we found out that housing starts fell 4.5% in October and even more concerning, single-family home building permits plummeted 14.5%, meaning that we’ll see an even more significant drop in housing starts in coming months.
Patrick Newport, U.S. Economist with IHS Global Insight, seemed downright worried when I spoke with him today. He called the housing start report, a “shocker.”
“These are people who know their business,” Newport said of the builders. “They’re in better touch with the market than we are and the press is.”
The financial crisis, which really got going after Lehman Brothers collapsed on Sept. 15, will likely cause serious damage to the already faltering housing market. It seems that mortgage applications are way down since September, an indication of falling buyer demand.
U.S. home mortgage applications dropped last week by a seasonally adjusted 6.2% compared to the previous week, according to the Mortgage Bankers Association. And the application volume was down 41.3% compared to the same week in 2007.