Chart of the Day: The Grim State of Home Building

More

Want to see what a bottom looks like in a chart? Look no further than the market for new home building. The National Association of Home Builders and Wells Fargo calculates a Housing Market Index, which provides a measure of how conductive the economy is to new home construction. As you can probably guess, it's not a great time to be a home builder. In fact, it's been an awful market since the boom peaked in 2005:

hmi 2011-05.png

Rarely can you see the bottom of a trough so clear in a chart, but there it is. In mid-2005, the index was above 70. Since September 2007, it has only risen above 20 once -- and that was only because the home buyer credit was expiring so some Americans were scrambling to beat the deadline.

Since winter, the index has become extremely stable. We learned today that it was at 16 again, for the sixth time in seven months. The bad news for home builders is that it probably won't rise much in the near- to medium-term either. As long as distressed property sales remain high, buying and renovating an existing home is a bargain compared to breaking ground on new construction. So at the bottom of the trough this market will likely stay, until most of the massive inventory of foreclosures is worked through.

Jump to comments
Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
Get Today's Top Stories in Your Inbox (preview)

Is Technology Making Us Better Storytellers?

How have stories changed in the age of social media? The minds behind House of Cards, This American Life, and The Moth discuss.


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

How Will Climate Change Affect Cities?

Urban planners and environmentalists predict the future of city life.

Video

The Inner Life of a Drag Queen

A short documentary about cross-dressing, masculinity, identity, and performance

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Business

Just In