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Economy in Brief

U.S. Home Builders' Index Declines
by Tom Moeller  April 16, 2012

The National Association of Home Builders/Wells Fargo reported weaker housing activity. The Composite Housing Market Index for April fell to 25 which was its lowest since January. Earlier figures were unrevised The index of single-family home sales fell to 26, down for the second consecutive month. Moreover, the figure still was lower than levels near 70 in 2004. The index of sales during the next six months reversed earlier gains with a decline to 32. Finally, the home builders' index of traffic of prospective fell to 18. its lowest since November. By region, the Northeast and the West remained strong but the Midwest & South both fell. The NAHB figures are 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 Q4 to 75.9% and reached 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 Apr Mar Feb Apr'11 2011 2010 2009
Composite Housing Market Index, SA (All Good=100) 25 28 28 16 16 16 15
 Single-Family Sales 26 29 30 15 16 16 13
 Single-Family Sales: Next Six Months 32 36 34 22 23 23 24
 Traffic of Prospective Buyers 18 22 22 13 11 12 13
Northeast 29 25 20 20 17 20 17
Midwest 23 31 30 14 14 14 13
South 24 27 25 15 18 17 16
West 32 32 43 18 15 13 12
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