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Economy in Brief

U.S. Home Builders' Survey Lower Still
by Tom Moeller November 18, 2008

The November Housing Market Index (HMI) from the National Association of Home Builders plumbed a new record low. At a single level of 9 nearly halved the old record low of 14 reached just last month. 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 8. That was down from last year's average level of 27 and 2006's average of 45.

Builders’ expectations for sales six months was relatively strong an held steady at a level of 19. The “traffic of prospective buyers, however, fell to a new low index reading of 7.

Each of the country's regions showed deterioration in the index as conditions in each region fell to a new low.

Not only are builders disturbed by the market for new homes, but the appraisal of conditions for remodeling a home also reached a record low during the third quarter.

The current market condition for remodeling of a home also is deemed poor.

The NAHB has compiled the Housing Market Index since 1985. The weights assigned to the individual index components are .5920 for single family detached sales, present time; .1358 for single family detached sales, next six months; and .2722 for traffic of prospective buyers. The results, along with other housing and remodeling indexes from NAHB Economics, are included in Haver’s SURVEYS database.

Mortgage Innovation, Mortgage Choice, and Housing Decisions from the Federal Reserve Bank of St. Louis can be found here.

Changing the Rule: State Mortgage Foreclosure Moratoria During the Great Depression is available here.

Nat'l Association of Home Builders November October   November '07 2007 2006 2005
Composite Housing Market Index 9 14 19 27 42 67
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