The NAHB/Wells Fargo housing market index is down 4 points to 40 in October after a small downward revision to 44 in September. The Econoday survey consensus is 45. The reading in October is the lowest since 35 in January after mortgage rates rose sharply in the fall of 2022. Once again rates are on the rise, but despite that, limited supplies of single-family homes have not yet led to significant price decreases. For October to-date, the Freddie Mac average rate for a 30-year fixed rate mortgage is 7.53 percent, up from 7.20 percent in September and 7.07 percent in August.

Builders see a broadly weaker market, The index for single-family home sales is down 4 points to 46 in October, its lowest since 40 in January. The index for expected sales of single-family homes is down 5 points to 44, its lowest since 37 in January. The buyer traffic index is down 4 points to 26 in October, its lowest since 23 in January. Homebuyers who prequalified for a mortgage at a lower rate may still be in the market to buy, but these are rapidly declining as rate locks expire.

Builders are less confident about the future due to decreased home affordability for buyers while rates remain at 22-year highs, and while the cost of financing building projects are elevated. The reported noted,"As a result of the extended high interest environment, many builders continue to reduce home prices to boost sales. In October, 32 percent of builders reported cutting home prices, unchanged from the previous month but still the highest rate since December 2022 (35 percent). The average price discount remains at 6 percent. Meanwhile, 62 percent of builders provided sales incentives of all forms in October, up from 59 percent in September and tied with the previous high for this cycle set in December 2022."

Forecasters expect the housing market index to hold unchanged at a very weak 45 in October after falling by a steep and unexpected 5 points in September.

The housing market index is a monthly composite that tracks home builder assessments of present and future sales as well as buyer traffic. The index is a weighted average of separate diffusion indexes: present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers of new homes.

This report provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the housing market index, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Whether the housing market index reflects new home sales or home resales, once a home is sold, it generates revenues for the realtor and the builder. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.