The March NAHB home builder index rose 2 pts m/o/m to 44 and that was 4 pts above expectations, though still below the breakeven of 50. Present conditions were up 2 pts to just below 50 at 49. The outlook though slipped 1 pt to 47 and prospective buyers traffic remained well under 50 at 31 but that is up 3 pts m/o/m.
Putting aside the affordability challenge that buyers have but still tight inventory situation for existing homes, which would imply greater demand for new homes but at lower prices but one builders have difficulty delivering, home builders are now about to face credit challenges in terms of the access to it (of course more so for smaller builders). The NAHB said “a follow-on effect of the pressure on regional banks, as well as continued Fed tightening, will be further constraints for acquisition, development and construction (AD&C) loans for builders across the nation. When AD&C loan conditions are tight, lot inventory constricts and adds an additional hurdle to housing affordability.”
I’ll repeat my belief again that for most banks in the US and Europe, we should be more worried about profitability, the likelihood of a shrinkage in loan growth (aka, credit crunch) and possibly equity raises to deal with bad duration marks rather than viability and one’s deposits.
NAHB
Prospective Buyers Traffic
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.