Realty Check

Lee Coursey Home Construction

Home builder confidence has fallen to yet another record low. No surprise there, but in reading the release from the National Association of Home Builders on its sentiment survey, I had to wonder about one particular measure of the index.

The NAHB breaks the index down by current buyer traffic, current sales, and prospective future sales. Both buyer traffic and current sales fell to new historic lows, but future sales expectations remained the same, significantly higher than the other two. What exactly is making the builders think things will be any better in six months?

So far the Treasury has done nothing with the TARP money to mitigate foreclosures and in fact the Treasury Secretary today reiterated his opposition to doing just that. FDIC Chairman Sheila Bair’s plan to guarantee modified loans with TARP money is getting plenty of play on the Hill, but little action. And the home builders’ own plan to get the government to subsidize really low-interest rate loans for a year in order to spur home buying hasn’t gained much momentum.

• Car Makers Seek Bailout, But Prospects Are Dim

I’m all about the hope, but I’m also all about talking to the builders, and I don’t see a whole lot of hope there. On Election Day I moderated a panel of three builder CEOs and the Big Builder ’08 Conference. Two were CEOs of public companies, one private. None of them had anything particularly hope-inspiring to say, and all of them spent the bulk of the time pushing their agenda for a bailout. I don’t blame them, seeing as buyer confidence is lower than ever and home prices have yet to hit the water.

New construction represents far less than a quarter of the total number of homes currently for sale, so I guess a bailout for builders will have to come second to a bailout for the overall housing market. But as I sit here watching a hearing about a big bailout for the automakers, I wonder if the home builders aren’t just waiting in the wings.

• Paulson, Congress Clash Over Use of Bailout Fund

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