The NAHB/Wells Fargo housing market index is down to 34 in November after an unrevised 40 in October, and similar to the 33 in November 2022. The November reading is the lowest since 31 in December 2022 and well below the consensus of 40 in the Econoday survey of forecasters. The reason for the low readings in November 2022 and 2023 is a period of rising mortgage rates that gave potential homebuyers pause and brought into question the affordability of buying a home. The Freddie Mac average rate for a 30-year fixed rate mortgage is 7.63 percent for November to-date, virtually the same as the increase to 7.65 percent in October after 72.0 in September. Mortgage rates have not been this high in over 22 years and a generation of home buyers is getting sticker shock after record lows as little as two or three years ago.

The index for current single-family home sales is down to 40 in November after 46 in October. It has been on the decline since 62 in July and is the lowest since 40 in January 2023. The index for expected single-family home sales is down to 39 in November after 44 in October and is the lowest since 37 in January. The buyer traffic index is down to 21 in November from 26 in the prior month and is the lowest since 20 in December 2022.

While builder confidence may be weak at present, lean inventories of existing homes to purchase and a hope that interest rates are nudging a bit lower should offer some support to residential construction.

Forecasters expect the housing market index to hold steady in November after falling a sharp 5 points in October to a much lower-than-expected 40.

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.