by Calculated Risk on 12/15/2009 01:00:00 PM

Click on graph for larger image in new window.

This graph shows the builder confidence index from the National Association of Home Builders (NAHB).

The housing market index (HMI) was at 16 in December. This is a decline from 17 in November. The record low was 8 set in January.

This is very low - and this is what I've expected - a long period of builder depression.

Note: any number under 50 indicates that more builders view sales conditions as poor than good.

This second graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the December release for the HMI and the October data for starts (November starts will be released Wednesday Dec 16th).

This shows that the HMI and single family starts mostly move in the same direction - although there is plenty of noise month-to-month.

To be blunt: Those expecting a sharp rebound in starts from the bottom are wrong. And remember - residential investment is usually the best leading indicator for the economy.

Press release from the NAHB: Builder Confidence Edges Down in December

The December HMI fell one point to 16, its lowest point since June of this year. Two out of three component indexes also were down, with a one-point decline to 16 registered for current sales conditions and a two-point decline to 26 registered for sales expectations in the next six months. The component gauging traffic of prospective buyers remained unchanged for a third consecutive month, at 13.

Regionally, December’s HMI results were somewhat mixed. The Northeast posted a three point gain to 23, while the West posted a one-point gain to 19, the South registered no change at 17, and the Midwest posted a two-point decline, to 12.