Homebuilder Sentiment Continues to Slide

The people who construct U.S. homes for a living are feeling increasingly pessimistic about their industry.

As this April 18 CNBC headline says:

Homebuilder sentiment drops for fourth straight month, as rising rates push housing to ‘an inflection point’

Of course, this pessimism is in stark contrast to the recent housing boom, which came with stories of people so eager to buy a home that they would forgo a walk-through to do so.

The price chart of a key index also reflects increasing pessimism.

This is from the April Elliott Wave Financial Forecast:

There is now a clear trend reversal in the S&P Supercomposite Homebuilding Index, shown above. In September 2005, the Elliott Wave Financial Forecast pointed to a similar reversal in the same index and stated that home prices would eventually follow. Prices peaked in August 2006.

After that August 2006 peak, U.S. home prices trended lower for more than five years.

The “deflation” of housing prices this go-round may last longer – and extend more deeply – given home prices rose even more rapidly than they did during the prior housing boom.