QI TAKEAWAY — The need for vigilance with respect to credit is intensifying. The housing recession is spreading to the broader economy and increasing the need to stay up in credit. And as tantalizing as homebuilders are after their pummeling, the risk of continued margin compression has not yet dissipated sufficiently.
- During the GFC, the NAHB’s Future Sales Index hit a low of -36% YoY in August 2006 and did not have a positive print again until July 2009; currently, Future Sales have fallen to a record low -53% YoY, while Buyer Traffic and Current Sales are both at new lows as well
- Existing single-family home sales fell to -28.2% YoY in October, and will likely soon best December 2007’s -31% YoY trough; meanwhile, with inventories ballooning as demand slows, Hours Worked by Realtors, which in turn leads PPI Real Estate Agents, should fall
- Per Zelman & Associates, more than 70% of homebuilders reduced net pricing in October, a record in data back to 2006; with the BBB-A spread historically out of step with the Leading Economic Index, credit risk remains real as housing troubles bleed into the broader economy