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TheStreet Open House

Homebuilders Vulnerable in Current Market

Stock quotes in this article: BZH, DHI, TOL, RYL, HOV

NEW YORK ( TheStreet) -- On Tuesday we learned that single-family housing starts rose 3.2% to a 516,000 annual rate.

This release is further evidence that the market for new homes is experiencing a slow recovery, but at half the pace of a healthy housing market.

The Federal Reserve's statement following Wednesday's FOMC meeting continued to describe the housing sector as "depressed," but as has been its habit, the central bank did not offer targeted help for the housing and mortgage markets.

On Monday, The National Association of Home Builders reported that its Housing Market Index, which gauges homebuilders' sentiment about the building of single-family homes in the U.S., rose one point in June to 29.

This reading is the highest since May 2007, but it's important to keep in mind that this index ranges from zero to 100 with 50 being neutral.

Although it's encouraging, the June reading is still significantly less than 50, which is an indication that the market for new homes remains weak.

The inventory of new homes for sale was reported at a record low of 146,000 units in April.

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