Instant View: July homebuilder sentiment at 15-month low

NEW YORK (BestGrowthStock) – U.S. home-builder sentiment fell more-than-expected in July to the lowest level in more than a year after a popular home-buyer tax credit expired in April, the National Association of Home Builders said on Monday.

KEY POINTS: * The NAHB/Wells Fargo Housing Market index fell two points to 14, the lowest level since April 2009, the group said in a prepared statement. * It was the second straight decline in the index. * Economists polled by Reuters had expected the index to fall to 16.

COMMENTS:

KEITH BLACKWELL, U.S. INTEREST RATE STRATEGIST, RBC CAPITAL MARKETS, NEW YORK:

“It was a bit below expectations and markets are acting accordingly. We feel this type of data really represents the numerous headwinds that are currently facing the American economy as the cyclical upswing that we experienced in the first half of the year begins to unwind and we’re left with the reality of the structural uncertainties that we’re facing.”

BILL CHENEY, CHIEF ECONOMIST, JOHN HANCOCK FINANCIAL SERVICES, BOSTON:

“It’s still really the aftermath of the end of the tax credit. Obviously what’s not going on is a rebound in employment, which is not driving a rebound in the demand for housing.

“At this point I don’t think the economy does depend on housing. It’s shrunk to such a small part of the economy that it almost doesn’t matter anymore. It will matter when it doubles in size or triples in size, which it will have to do in due course. Right now housing starts are running around half a million and trend household formation is 1.5 million.

“This just says that housing is bouncing along the bottom.

“Any kind of stimulus would be a good idea at this point because obviously the economic recovery is fragile, but I don’t think it’s going to happen politically.”

JOHN BRADY, SENIOR VICE PRESIDENT, MF GLOBAL, CHICAGO:

“Not exactly great. It was a pretty weak number, and weaker than what the market was expecting. You have to remember, it was at 22 just two short months ago. This is payback for the expiration of the tax credit, so we all knew it could happen.

“The market movement today is all on earnings, and we were oversold. I think we’re going to have a modest upside bias until Bernanke’s comments Wednesday morning.”

JONATHAN BASILE, ECONOMIST, CREDIT SUISSE, NEW YORK:

“This is more about the payback from the tax credit. The fact is that you haven’t seen home builder sentiment stabilize means that underlying demand is still weak.

“Seeing these numbers go down fits the notion that housing will be a drag into the third quarter.

“No one is surprised by this but it’s a disappointment nevertheless. It’s going to need a big carrot for people to buy homes. They are just not confident enough to do so.

“The downside surprise today means a downside surprise in housing starts tomorrow.”

MARKET REACTION: STOCKS: U.S. stocks (Read more about the stock market today. ) trim gains after weaker-than-expected homebuilder sentiment data. BONDS: U.S. Treasury debt prices little changed. DOLLAR: U.S. dollar holds losses versus euro, gains versus yen.

Instant View: July homebuilder sentiment at 15-month low