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Economy in Brief

U.S. Home Builders Index Strengthens to 10-Year High
by Tom Moeller  October 19, 2015

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo increased 4.9% to 64 (18.5% y/y) from a downwardly revised September level of 61. It was the highest level since October 2005 and beat expectations for 62 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 strengthened to 70 (22.8% y/y), also the highest level since October 2005. Similarly, the index of expected sales during the next six months improved to a 10-year high of 70.

Realtors reported that their traffic index held steady m/m at 47, the highest level since September of last year.

Improvement in the housing market index reflected increases throughout most of the country. The reading for the West gained 16.9% (43.4% y/y) while for the Northeast it rose 13.0% (33.3% y/y). In the South the homebuilders index edged 1.5% higher (11.7% y/y) but for the Midwest it eased 3.3% (+11.3% 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.

National Association of Home Builders Oct Sep Aug Oct'14 2014 2013 2012
Composite Housing Market Index, SA (All Good=100) 64 61 61 54 52 51 34
 Single-Family Sales: Present 70 67 66 57 56 55 36
 Single-Family Sales: Next Six Months 75 68 70 64 61 58 41
 Traffic of Prospective Buyers 47 47 45 4 39 39 27
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