In a world where non-negative data is good news, the December NAHB/Wells Fargo Housing Market Index remained steady at 16.  The steady but low level reflects continued uncertainty about the general economic recovery.  Builders and consumers remain unconvinced that the economy is going to steadily and consistently improve.  Thus far, for every good news data, there is a poor or unconvincing report that raises doubts about the sustainability of the recovery.

The index and its subcomponents, current sales, expectations for future sales and traffic, are all at levels last seen in early summer and above the recent troughs of early fall.  The sharp drop in optimism after expiration of the home buyer credit appears to be over and now the market awaits news that job creation will be sufficient to bring consumers back.

Builders’ written comments continue to emphasize the stiff competition from foreclosures and short sales and the diminution of value those distressed sales impose on appraisals.  Builders are not seeing improvement in credit availability for either themselves or their customers.  The homes that are selling are at the lower end of the price ranges and aimed at first time home buyers.