- The NAHB Housing Market Index (HMI) dropped to 70 in November, the first decline since June.
- The traffic of prospective buyers has declined despite low mortgage rates.
- The U.S. housing market could get into more trouble this week as more data releases emerge.
Yet another sign of a simmering U.S. housing market crisis emerged when the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) dropped by a single point to 70 in November.
While an admittedly small decline, it’s concerning because it’s the first retreat in the HMI reading since June. The index had hit its highest level for 2019 in October. The latest dip adds to a bunch of other negative data, telling us that something may be going wrong with the U.S. housing market.
Another red flag for the U.S. housing market
U.S. housing market bulls would like to believe that the minor slip in the HMI – which measures the confidence of single-family homebuilders – is nothing to worry about. After all, the November 2019 reading is well above the year-ago period’s reading of 60. Moreover, any reading more than 50 is taken as a sign of healthy homebuilder confidence.
However, one shouldn’t forget that this latest piece goes on to reinforce the thought that the U.S. housing market is headed toward bad times. Two of the three components of the HMI reported a decline in November. The traffic of prospective buyers declined 1 point to 53, which seems surprising given that mortgage rates are close to historic lows.
The 30-year fixed-rate mortgage, which is considered as a benchmark, was at 3.75 percent last week. This was well below the previous-year period’s rate of 4.94 percent.
It looks like the recent uptick in the benchmark fixed-rate mortgage is having a…