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Economy in Brief

U.S. Home Builders' Survey Plumbed A New Low
by Tom Moeller October 20, 2008

The National Association of Home Builders indicated that its October Housing Market Index (HMI) fell to a record low of 14. 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 also fell to a record low of 14. That was down from last year's average level of 27 and 2006's average of 45.

Builders’ expectations for sales six months also plumbed a new series' low at 19. The “traffic of prospective buyers also fell to a new low.

Each of the country's regions showed deterioration in the index; however, in the South and in the West conditions, fell to new low.

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 October September    October '07 2007 2006 2005
Composite Housing Market Index 14 17 19 27 42 67
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