It’s not exactly a shocker, but the nation’s home builders are in dire need of Xanax. The confidence index for October came out today, and it’s hit another record low.
What’s particularly disheartening is that the index had actually ticked up a point in September thanks to the government takeover of Fannie and Freddie and the resulting lower interest rates.
Builders were literally seeing increased traffic in their model homes in September. Not now. The builders are citing the crash in stocks, fear among consumers, rapid job deterioration, you name it, it’s not good. Folks in the know who were calling for a turnaround with the builders this fall are turning around themselves.
One of the biggest issues is mortgage rates now. We thought they were headed down thanks to the takeover of Fannie and Freddie at the beginning of last month, but now the TARP (the big $700 billion rescue package) is having some unintended consequences. Investors are dumping treasuries ahead of what could be huge government debt to pay for the TARP. Mortgage rates saw their biggest one-week spike in more than five years to 6.47 percent.
We’re in for housing starts tomorrow. Look for that number to give us a Halloween scare for sure.
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