On the tape yesterday (Bloomberg):
Confidence among U.S. homebuilders unexpectedly dropped in January to the lowest level since June, a sign the housing recovery may stall in coming months.
The National Association of Home Builders/Wells Fargo index of builder confidence decreased to 15 from 16 the prior month, the Washington-based group said today. Readings below 50 mean most respondents view conditions as poor.
The report showed traffic slowed to a 10-month low, indicating the government’s extension and expansion of its first-time buyer program has, so far, not drawn in new demand after propelling total sales to an almost three-year high in November. A projected record 3 million foreclosures this year may also pressure prices, making it more difficult for homebuilders to turn a profit.
Now imagine what these numbers would be like without the first time homeowner tax credit. Housing is not recovering as many would like to think. Take a look at the foreclosure listings in your local paper - are they getting better? Look at the number of mortgage modifications under HAMP; while they have crossed the 100k mark, this is a drop in the bucket and the second lien problem is nowhere near solved.
Naturally, the homebuilder group is up on the news. Maybe investors know something builders don't.
Disclosure: No positions
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