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Economy in Brief

NAHB Housing Market Index: Down Hard Again
by Tom Moeller December 20, 2005

The National Association of Home Builders' (NAHB) Composite Housing Market Index fell again in December; by four points on top of a seven point November decline. The decline to 57 dropped the index to the lowest level since April 2003 and the index ended the year roughly 20% below the year end 2004 level.

During the last twenty years the y/y change in the annual composite index has had an 85% correlation with the change in single family housing starts and there has been a 75% correlation between the current sales index and new single family home sales.

The m/m drop reflected sharp declines throughout the country, notably in the West.

The index for current sales of single family homes in December fell sharply to the lowest level since May 2003 while the index for sales in six months also fell hard the lowest in over two years.

Traffic of prospective home buyers plunged to its lowest level since the Spring of 2003.

The NAHB index is a diffusion index based on a survey of builders. Readings above 50 signal that more builders view conditions as good than poor.

Visit the National Association of Home Builders.

Nat'l Association of Home Builders Dec Nov Dec '04 2005 2004 2003
Composite Housing Market Index 57 61 71 67 68 64
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