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Home sales still down: Nobody's buying

Home sales won't pick up until people start buying again, and buyers haven't been this hard to find for decades.

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The 'buyer traffic' index usually predicts home sales by six months to a year; if buyer traffic has stayed near the low set in November 2008, home sales won't rebound any time soon. The index tracks the foot traffic expressing an interest in new home construction, over the past 25 yeras. Buyer traffic in purple; buyer traffic compared to 12 months before (as a percentage) in orange.

Today, the National Association of Home Builders (NAHB) released their latest Housing Market Index (HMI) showing a continued slight increase for all measures as home builders continue to plod through the weakest activity seen in generations.

It's important to recognize that currently each sentiment index is showing notable year-over-year declines with each still sitting very near the lowest levels seen in over 20 years, a testament to the significance of the latest pullback.

Further, the "buyer traffic" index is showing the weakest results pulling back some 15.38% since October of 2009 and sitting just above the lowest level ever recorded.

The new home market will likely not resume any significant form of healthy function until the considerable overhang of inventory is cleared.

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