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Economy in Brief

U.S. Home Builders Index Holds at 2005 High
by Tom Moeller  July 16, 2015

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo held steady during July at 60 (+13.2% y/y) versus an upwardly revised June. It was the highest level since November 2005 and exceeded expectations for 59 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 improved to 66 (17.9% y/y), the highest level in ten years. The index of expected sales during the next six months also firmed to another decade high.

Realtors reported that their traffic index eased m/m to 43 and was down from the September high of 47.

Strength in the housing market reflected index improvement in the Northeast where it moved up 10.6%, higher by roughly one-third y/y. The index for the Midwest gained 3.5% (13.5% y/y) while the index for the West improved 3.3% (8.6% y/y). In the South, the index fell 1.6% (+17.0% y/y).

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 Puzzling Persistence of Place from the Federal Reserve Bank of Philadelphia is available here.

National Association of Home Builders Jul Jun May Jul'14 2014 2013 2012
Composite Housing Market Index, SA (All Good=100) 60 60 54 53 52 51 34
 Single-Family Sales: Present 66 65 58 56 56 55 36
 Single-Family Sales: Next Six Months 71 69 63 63 61 58 41
 Traffic of Prospective Buyers 43 44 39 39 39 39 27
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