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Economy in Brief

U.S. Home Builders Association Index Is Stable At A Depressed Level
by Tom Moeller  January 18, 2011

The National Association of Home Builders reported that their index of housing market activity held at 16 for the third consecutive month; the average for all of 2010. The latest figure remained above the all-time low of 8 reached in January of 2009. Consensus expectations were for an uptick to 17.

The Home Builders index is compiled from survey questions asking builders to rate market conditions as "good," "fair," "poor" or "very high" to "very low." The figure is thus a diffusion index with numerical results over 50 indicating a predominance of "good" readings. During the last ten years there has been a 80% correlation between the y/y change in the index and the change in new plus existing single family home sales.

The index of single-family home sales also held steady at 16 and remained down from levels near 80 in 2004. The index of sales during the next six months was unchanged as well at 25. The home builders' index of traffic of prospective buyers ticked up to 12. Each of these NAHB figures is seasonally adjusted. Deterioration in the Builders' index for the Northeast was off set by improvement in the Midwest and West. Readings for activity in the South were unchanged.

The Home Builders' Housing Opportunity Index, which is the share of homes sold that could be considered affordable to a family earning the median income, inched down in Q3 to 72.1%. That still was near the record high, buoyed by lower home prices, lower interest rates and higher income. (There is a break in the series from 2002 to 2003.)

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.

National Association of Home Builders Jan Dec Nov Jan '10 2010 2009 2008
Composite Housing Market Index (All Good=100) 16 16 16 15 16 15 16
 Single-Family Sales 16 16 16 15 16 13 16
 Single-Family Sales: Next Six Months 25 25 25 26 23 24 25
 Traffic of Prospective Buyers 12 11 12 12 12 13 14
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