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Economy in Brief

U.S. Home Builder Index Holds Steady
by Tom Moeller  September 18, 2018

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo remained unchanged during September at 67. August's figure was unrevised and the index remained below its December 2017 high of 74. Expectations had been for 66 in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 61% correlation between the y/y change in the home builders index and the y/y change in new home sales.

The index of present sales conditions improved to 74 in September from 73 during August. It remained down versus its peak of 80 last December. The index of expected conditions in the next six months rose to 74 this month following an August decline to 72. The recent peak in this index was 80 back in February.

The index of traffic of prospective buyers held steady at 49 and equaled the lowest level since October of last year. The index peaked at 58 nine months ago.

Stability in the national index reflected mixed patterns of change throughout the country. The index for the Northeast region surged to 61 this month from 46 in August. It equaled the highest level since November 2005. In the West, the index held steady m/m at 73. It has been trending lower since its peak of 84 reached nine months ago. In the South, the index eased to 69 from 72 and was below the December high of 75. For the Midwest, the housing market index declined m/m to 56 from 58, and remained well below the peak of 76 reached in December.

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions asking builders to rate market conditions as "good," "fair," "poor" or "very high" to "very low." The figure is thus a diffusion index with numerical results six over 50 indicating a predominance of "good" readings. The weights assigned to the individual index components are 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next months and 0.2722 for traffic of prospective buyers. The results are included in Haver's SURVEYS database. The expectations figure is available in Haver's MMSAMER database.

National Association of Home Builders Sep Aug Jul Sep '17 2017 2016 2015
Composite Housing Market Index, SA (All Good=100) 67 67 68 64 68 61 59
 Single-Family Sales: Present 74 73 74 70 74 67 64
 Single-Family Sales: Next Six Months 74 72 73 73 76 67 66
 Traffic of Prospective Buyers 49 49 51 47 50 45 43
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