· The
National Association of Home Builders reported a stable performance in
its Housing Market Index (HMI) for August, albeit at the index’s
all-time low of 16, first seen in July.
It stood at 22 this time last year and averaged 19 for the first
six months of 2008. The
index is compiled from survey questions asking builders to rate market
conditions as “good”, “fair” or “poor” or “very high” to
“very low”. Numerical
equivalent results over 50 indicate a predominance of “good”
readings.· Since
1990, the year-to-year change in this index has had a correlation of 72%
with the year-to-year percentage change in new single-family home sales
(see graph). One wonders,
then, if the relative improvement in the HMI might be a precursor to an
outright improvement in home sales.
· In
this regard, the Home Builders Association press release highlights the
gains in two of the HMI components.
Present sales conditions ticked up from 15 in July to 16 this
month and builders’ expectations for six months out moved from 23 to
25. The most tangible measure, the “traffic of prospective
buyers” held steady at its all-time low of 12.
By region, two parts of the country showed increases, the
Northeast and the Midwest. The
South was steady and conditions in the West continued to erode.
These readings ranged from 11 to 20.
· The NAHB has compiled the Housing Market Index since 1985. The results, along with other housing and remodeling indexes from NAHB Economics, are included in Haver’s SURVEYS database.