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Economy in Brief

U.S. Home Builders Index Works Its Way Lower
by Tom Moeller  October 16, 2013

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell 2 points to 55 this month after a 1 point decline in September, last month reported as no change. This latest reading disappointed expectations for stability at 58. The index of single-family home sales fell to 58, the lowest reading since June. The index of sales during the next six months declined to 62, also its lowest level since June. Realtors also saw the traffic index of prospective buyers fall to its lowest level in four months.

Activity was mixed around the country. It fell out of bed in the Northeast where the index dropped to 31, its lowest level in six months. The figure for the West followed with a 5 point decline to 58. In the South, the index dropped to 54, its lowest since July, from 58. The figure for the Midwest gained to 65 from 63, a new high for the recovery. The index for traffic of prospective buyers fell to 44, its lowest level since June. The NAHB figures are seasonally adjusted.

The NAHB has compiled the Housing Market Index since 1985. It reflects 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 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 are included in Haver's SURVEYS database. The expectations figure is available in Haver's MMSAMER database.

The Parts Are More Than the Whole: Separating Goods and Services to Predict Core Inflation from the Federal Reserve Bank of New York is available here.

National Association of Home Builders Oct Sep Aug Oct'12 2012 2011 2010
Composite Housing Market Index, SA (All Good=100) 55 57 58 41 34 16 16
 Single-Family Sales: Present 58 60 62 41 36 16 16
 Single-Family Sales: Next Six Months 62 64 68 51 41 22 23
 Traffic of Prospective Buyers 44 46 46 35 27 13 12
Northeast 31 44 39 32 29 17 20
Midwest 65 63 64 40 36 14 14
South 54 58 56 42 34 18 17
West 58 63 59 48 38 15 13
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