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Economy in Brief

U.S. Home Builder Index Rebounds
by Tom Moeller  August 15, 2017

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo increased 6.3% to 68 during August and made up most of the prior two months' declines. Despite uneven m/m performance this year, the index was 15.3% higher y/y. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 72% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The index for conditions in the next six months increased 6.8% (18.2% y/y) and equaled the highest level since December. The index of present conditions in the housing market gained 5.7% (13.8% y/y) to the highest level in three months.

Home builders reported that the traffic index rebounded 2.1% m/m. As it made up July's decline, the index was 11.4% higher y/y. The index has fallen in all but two months this year.

Amongst the regional indexes, the index for the South jumped 11.1% (9.4% y/y) while the index for the West rose 6.8% (16.2% y/y). For the Northeast, the index rose 6.3% (21.4% y/y), and for the Midwest, the index gained 1.6% (22.6% 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 six 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 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 Aug Jul Jun Aug'16 2016 2015 2014
Composite Housing Market Index, SA (All Good=100) 68 64 66 59 61 59 52
 Single-Family Sales: Present 74 70 72 65 67 64 56
 Single-Family Sales: Next Six Months 78 73 75 66 67 66 61
 Traffic of Prospective Buyers 49 48 49 44 45 43 39
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