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Economy in Brief

U.S. Home Builders' Index Again Is Strong
by Tom Moeller  February 15, 2012

The National Association of Home Builders/Wells Fargo reported that housing market activity continues to improve. The Composite Housing Market Index for February again rose four points to 29, its highest level since April 2007. Earlier numbers were unrevised. The index of single-family home sales rose five points to 30, also the highest since 2007 but still down from levels near 70 in 2004. The index of sales during the next six months rose five points to 34, its highest since 2007. Finally, the home builders' index of traffic of prospective buyers only ticked up m/m to 22 but remained sharply improved versus last year. By region, the West more-than-doubled the January figure and the Midwest rose to its highest since early 2003. Figures for the Northeast and the South fell moderately m/m. 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 slightly in Q3 to 72.9%. It thus remained 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 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.

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 Feb Jan Dec Feb'11 2011 2010 2009
Composite Housing Market Index, SA (All Good=100) 29 25 21 16 16 16 15
 Single-Family Sales 30 25 22 17 16 16 13
 Single-Family Sales: Next Six Months 34 29 26 25 23 23 24
 Traffic of Prospective Buyers 22 21 18 12 11 12 13
Northeast 21 23 14 21 17 20 17
Midwest 30 24 23 12 14 14 13
South 25 28 25 18 18 17 16
West 44 21 16 13 15 13 12
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