NAHB index moves up – Are you kidding?

The NAHB index has moved up from lows in December at 18 to a current level of 20. This is the second month in a row of an increase, but any optimism should is pure speculation. This is a diffusion index so good conditions would exist with a reading above 50. We are nowhere near that mark.

In fact, the only component of the index that showed some life was the traffic of prospective buyers. People are looking but the market is not clearing. The only reason the prospects look a little higher is that brokers probably think that the increased traffic will lead to sales but that tells us nothing about the price or whether there is any increase in wealth for the seller. Brokers get paid on volume. Of course, the commission is a function of price but the turnover is what is important to them at his time.