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Economy in Brief

The National Association of Home Builders (NAHB) reported that the August Composite Housing Market Index at 32 fell another 18% from 39 in July to the lowest level since February, 1991. Consensus expectations were for only a small decline to 38.

During the last twenty years there has been a 75% correlation between the y/y change in the Composite Index and the change in single family housing starts.

The sub-indexes covering sales of single family homes (-50.7% y/y) and sales in the next six months (-48.1% y/y) were both down sharply again m/m.

An index of the traffic of prospective home buyers fell further in August. At 21 (-58% y/y) it was the lowest since January, 1991 and the second lowest since the index began in 1985.

Housing markets in all regions of the U.S. weakened this month. The index in the Northeast was off 8.1% (-51.4% y/y). In the Midwest the index dropped 25% (-66.7% y/y). The West was down 19.2% (-50.6% y/y) and the South declined 18% (-44.6% y/y).

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

Visit the National Association of Home Builders.

Nat'l Association of Home Builders August July August '05 2005 2004 2003
Composite Housing Market Index 32 39 67 67 68 64
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