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Economy in Brief

U.S. Home Builders Index Increases To Seven Year High
by Tom Moeller  November 19, 2012

The housing market continues to improve. The Composite Housing Market Index from the National Association of Home Builders/Wells Fargo increased this month to 46 from 41 in October. The latest figure was the highest since April 2006. The index of single-family home sales jumped to 49, also the highest since 2006. The index of sales during the next six months improved slightly to an elevated 53. Finally, the home builders' index of traffic held steady at 35, its highest since April 2006. By region, the index for the Midwest was the strongest and jumped to 51. That was followed by the South with a rise to 49, its highest since 2006. The index for the West ticked up to a still-high 49. Affordability in the Northeast slipped and remained low relative to the rest of the country.

The index of prospective new home buyer traffic held steady at 35, its highest level since April 2006. 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, rose slightly in Q3'12 to 74.1% but remained down from the series' high. (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. 

Have Financial Markets Become More Informative? from the Federal Reserve Bank of New York can be found here.

 

National Association of Home Builders Nov Oct Sep Nov'11 2011 2010 2009
Composite Housing Market Index, SA (All Good=100) 46 41 40 19 16 16 15
 Single-Family Sales 49 41 42 20 16 16 13
 Single-Family Sales: Next Six Months 53 51 51 25 22 23 24
 Traffic of Prospective Buyers 35  35 30 15 13 12 13
Northeast 31 32 31 16 17 20 17
Midwest 51 40 45 24 14 14 13
South 49 42 39 21 18 17 16
West 49 48 44 15 15 13 12
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