Jump to content
House Price Crash Forum
Sign in to follow this  
Its-Already-Crashing

Is The Us Housing Slump Predicting A Major Recession Ahead?

Recommended Posts

The US based Housing Market Index (HMI) is based on a monthly survey of NAHB members designed to take the pulse of the housing industry, especially the single-family industry. The survey asks respondents to rate general economic and housing market conditions. The survey is used by the Federal Reserve Board as one key measure of the health of the economy. The HMI is a weighted average of separate diffusion indices, calculated for three key single family series in the survey: Present Sales of New Homes, Sale of New Homes Expected in the Next 6 Months and Traffic of Prospective Buyers in New Homes.

In July 1990 the NAHB Housing Index which tracks US property prices dropped to 32 (the current level) and that was the start of the early ‘90s recession.. The Housing Market Index has never before been at or below 32 outside of recession. The chart in the URL below shows the S&P 500 Index. Look at the relationship between these two charts.

http://www.housepricecrash.0catch.com

(a couple of annoying pop ups need to be clicked away before you can view the charts)

Share this post


Link to post
Share on other sites

The US based Housing Market Index (HMI) is based on a monthly survey of NAHB members designed to take the pulse of the housing industry, especially the single-family industry. The survey asks respondents to rate general economic and housing market conditions. The survey is used by the Federal Reserve Board as one key measure of the health of the economy. The HMI is a weighted average of separate diffusion indices, calculated for three key single family series in the survey: Present Sales of New Homes, Sale of New Homes Expected in the Next 6 Months and Traffic of Prospective Buyers in New Homes.

In July 1990 the NAHB Housing Index which tracks US property prices dropped to 32 (the current level) and that was the start of the early ‘90s recession.. The Housing Market Index has never before been at or below 32 outside of recession. The chart in the URL below shows the S&P 500 Index. Look at the relationship between these two charts.

http://www.housepricecrash.0catch.com

(a couple of annoying pop ups need to be clicked away before you can view the charts)

Great find, surprised there aren't more comments. Oh well.

Whats the R-squared (if you lag by 6 months)?

The visual correlation is startling - if the economy relies on consumer sentiment, which I think it may, then the NAHB index indicates the US is 6 months from recession. The S&P looks toppy doesn't it?

JY

Share this post


Link to post
Share on other sites

http://www.businessweek.com/investor/conte...index_top+story

BusinessWeek

SEPTEMBER 8, 2006
Investing
By Peter Coy
Builders Brace for a Housing Downturn
Even this typically sunny sector is expecting prices to fall as prelude to a prolonged downturn
The housing market is looking sicker by the day. On Sept. 7, the perpetually optimistic National Association of Realtors acknowledged for the first time that housing prices are likely to fall on a year-over-year basis, at least for a time.

Sentiment must be in the toilet by now about to be carried away down into the sewer. :o

Share this post


Link to post
Share on other sites

NO there will not be a major recession!!!!...barring another terrorist attack.

the recent pullback in oil prices will help consumer,more so in the US than here

the stockmarket has been treading water at best for 6 months or so while earnings have been improving....now the P/E ratio is better I'd expect to see renewed buying of US stocks fairly soon....also there is a lot of worry about whether it's gonna go pete tong.

Bull markets climb a wall of worry.most of the run-of-the-mill bad news is priced in.

don't forget the old chestnut of sector rotation.....those folks who have sold out of property will be looking at stocks now thinking "wow they've gone up 50% or more in 3 years,my house hasn't made anywhere near as much"

and to boot,the presidential election cycle starts early next year,and if history is anything to go by stocks gain as economic stops are pulled out to make everything look rosy for 2008.

I'm not saying this is a certainty,but history is a reasonable guide.

Share this post


Link to post
Share on other sites

NO there will not be a major recession!!!!...barring another terrorist attack.

No risk there then. And clearly not fully priced in - how could it be?

the recent pullback in oil prices will help consumer,more so in the US than here

A pullback to $60-70 coming from a long period of $20+ oil - you think that will help?

the stockmarket has been treading water at best for 6 months or so while earnings have been improving....now the P/E ratio is better I'd expect to see renewed buying of US stocks fairly soon....also there is a lot of worry about whether it's gonna go pete tong.

P/E is still very high on a historic basis. Look at the double top formation - looks like a last gasp.

Bull markets climb a wall of worry.most of the run-of-the-mill bad news is priced in.

We are entering uncharted territory. I would not be so sanguine.

don't forget the old chestnut of sector rotation.....those folks who have sold out of property will be looking at stocks now thinking "wow they've gone up 50% or more in 3 years,my house hasn't made anywhere near as much"

Who and where are these mythical investors who are out of property and in cash? Some may bid up shares all they like but if earnings take a hit because of a consumer slowdown / recession smart investors will stay clear.

and to boot,the presidential election cycle starts early next year,and if history is anything to go by stocks gain as economic stops are pulled out to make everything look rosy for 2008.

So the US will cut IRs while inflation soars? Good plan!

I'm not saying this is a certainty,but history is a reasonable guide.

History is history: difficult to know at the time.

JY

Share this post


Link to post
Share on other sites

the stockmarket has been treading water at best for 6 months or so while earnings have been improving....now the P/E ratio is better I'd expect to see renewed buying of US stocks fairly soon....also there is a lot of worry about whether it's gonna go pete tong.

I think you'll find that the US stock market, as measured by the Dow, has been trading water for 8 YEARS. It's gone nowhere since 1998.

If you measure it by the S&P500 then it's worse. If you measure it by the NASDAQ then we're still nowhere near a recovery from the year 2000 crash.

And of course if you measure even the Dow against practically anything other than US Dollars then it hasn't gone sideways at all. It's somewhere between falling and an outright crash depending on what you measure it against. At best, it's gone sideways versus US Dollars.

Typical bear market behaviour. Stock market goes sideways over an extended period in nominal terms, falling hard in real terms, whilst the focus turns to war etc.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.