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Economy in Brief

U.S. Home Builder Index Eases
by Tom Moeller  January 17, 2018

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell 2.7% (+7.5% y/y) to 72 during January following its 7.2% December surge. The decline matched expectations in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 65% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The index of present sales conditions in the housing market fell 1.2% to 79 (+9.7% y/y). The index for conditions in the next six months fell 1.3% to 78 (+2.6% y/y).

Home builders reported that the traffic of prospective buyers index fell 6.9% to 54 (+5.9% y/y).

Amongst the regional indexes, the index for the Midwest declined 9.2% (+4.5% y/y) while the index for the West fell 1.2% (+10.7% y/y). For the South, the index fell 4.0% (+5.9% y/y). The index for the Northeast surged 17.0% (11.6% 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 Jan Dec Nov Jan '17 2017 2016 2015
Composite Housing Market Index, SA (All Good=100) 72 74 69 7.5% 68 61 59
 Single-Family Sales: Present 79 80 77 9.7 74 67 64
 Single-Family Sales: Next Six Months 78 79 76 2.6 76 67 66
 Traffic of Prospective Buyers 54 58 50 5.9 50 45 43
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