On Oct. 17, the National Association of Home Builders reported that their Housing Market Index regained the four points it lost in September, moving back to 68 in October. This measure of housing sentiment peaked at 71 in March versus its all-time high of 72 set in June 2005, one month before homebuilder stocks peaked.

On Oct. 18, the Census Bureau reported that single-family housing starts, the NAHB benchmark, fell to 829,000 units in September, down from 851,000 units in August.

Despite a stalled housing market, homebuilders DR Horton, KB Home, Lennar, Pulte Group and Toll Brothers are solidly in bull market territory versus their postelection lows, but three of the five are in the bear market territory since their mid-2005 all-time intraday highs.

The NAHB HMI at 68 in October is shown in blue with the scale at the left side of the graph. Single-family housing starts are in red and are shown on the right side of the graph. This reading is 851,000 for August, which is the level in today’s graph. Note that the HMI is leading the rise in starts by a significant margin, which should be considered a warning. When the index was 72 in June 2005, single-family starts were approaching 1.8 million units, not struggling at half that pace.

The NAHB remains concerned about the communities affected by Hurricanes Harvey and Irma. They estimate that 15.3% of the overall decline in single-family starts was in the 14% of the country that remains under the clouds of hurricanes Harvey and Irma.

Courtesy of the National Association of Home Builders

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