But housing demand has been weakening rather than strengthening, particularly in the new-home market and the owner-occupied portion of the existing-home market (abstracting from foreclosure-related sales to investors). In fact, NAHB?EUR??,,????'???s single-family Housing Market Index hit a record low in January and preliminary tabulations suggest little change in February.

The disconnect between affordability measures and housing demand points to the inherent deficiencies of the affordability measures as forecasting devices. In the current circumstances, improvements in these measures are being overwhelmed by tightening mortgage lending standards, expectations of further house price declines and consumer concerns about the darkening economic environment.

The restoration of measured affordability bodes well for housing down the line, but it?EUR??,,????'???s obvious that special measures now are needed to spur home buying and arrest the downward spiral in house prices. A temporary incentive, such as the home buyer tax credit in the Senate?EUR??,,????'???s version of fiscal stimulus, would be just what the doctor ordered. ?EUR??,,????'??? Courtesy of NAHB