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Economy in Brief

U.S. Home Builders' Survey Improved
by Tom Moeller September 16, 2008

The National Association of Home Builders reported that its September Housing Market Index (HMI) improved. The rise to 18 followed two months at 16, which were the lowest readings in the twenty three history of the index. The index is compiled from survey questions asking builders to rate market conditions as “good”, “fair”, “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. As a result, the latest HMI index at best indicates a bottoming of the housing market's troubles.

The Home Builders Association indicated that its sub-index of present sales conditions ticked up again, last month to 17 from 16 in August and from the cycle low of 15 in July.

Builders’ expectations for sales six months from now improved even more to a reading of 30. That was its highest level since April. The “traffic of prospective buyers,” however, remained near its all-time low at 14.

Each of the country's regions improved last month and by the most in the Northeast and the Midwest. In the South and in the West conditions ticked up only slightly.

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.

Nat'l Association of Home Builders September August    Sept.'07 2007 2006 2005
Composite Housing Market Index 18 16 20 27 42 67
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