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Economy in Brief

U.S. Home Builders Index Rebounds to September High
by Tom Moeller  June 15, 2015

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo increased during June to 59 (20.4% y/y) following an unrevised decline to 54 in May. It was the highest level in nine months and exceeded expectations for 56 in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been an 80% correlation between the y/y change in the home builders index and the y/y change in single-family housing starts.

The index of single-family home sales jumped to 65 (22.6% y/y), the highest level in ten years. The index of expected sales during the next six months firmed to 69 (19.0% y/y), also a ten year high.

Realtors reported that their traffic index rebounded to 44 (22.2% y/y), matching the January high.

Recovery in the housing market was led by the Midwest this month as the index increased 16.3% to 57 (21.3% y/y) following sharp declines in the prior two months. In the Northeast, the index moved up 11.9% to 47 (38.2% y/y) and was well above the March low. The index for the West gained 8.9% to 61 (15.1% y/y), the highest level since February. In the South, the index rose 6.8% to 63 (21.2% y/y), the highest level in nine months.

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.

National Association of Home Builders Jun May Apr Jun'14 2014 2013 2012
Composite Housing Market Index, SA (All Good=100) 59 54 56 49 52 51 34
 Single-Family Sales: Present 65 58 61 53 56 55 36
 Single-Family Sales: Next Six Months 69 63 63 58 61 58 41
 Traffic of Prospective Buyers 44 39 40 36 39 39 27
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