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Economy in Brief

U.S. Home Builders Report Sales Stuck in the Doldrums
by Tom Moeller  August 15, 2011

The National Association of Home Builders reported that its August index of housing market activity held m/m at 15. Though the latest figure remained above the all-time low of 8 reached in January of 2009, it was at the low end of the recent range. The August figure matched Consensus expectations. During the last ten years there has been a 64% correlation between the y/y change in the index and the change in housing starts.

The index of single-family home sales notched higher to 15, and that was up modestly from the June low. However, it remained down from levels near 80 in 2004. The index of sales during the next six months fell back after a modest July gain. The home builders' index of traffic of prospective buyers ticked up m/m but remained near its low for this year. By region, the index for the Northeast improved the most m/m offset by a decline in the Midwest and stability elsewhere. Each of these NAHB figures is seasonally adjusted.

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, improved in Q1 to 74.6%, another 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 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 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. The expectation figure is available in Haver's MMSAMER database.

National Association of Home Builders Aug Jul Jun Aug'10 2010 2009 2008
Composite Housing Market Index, SA (All Good=100) 15 15 13 13 16 15 16
 Single-Family Sales 16 15 13 13 16 13 16
 Single-Family Sales: Next Six Months 19 21 15 18 23 24 25
 Traffic of Prospective Buyers 13 12 12 10 12 13 14
Northeast 19 15 17 18 20 17 17
Midwest 10 12 11 15 14 13 13
South 17 17 14 12 17 16 20
West 15 14 11 8 13 12 13
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