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Economy in Brief

U.S. Home Builder Index Backpedals
by Tom Moeller  June 18, 2018

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell 2.9% (+3.0% y/y) to 68 during June and retraced its May increase to 70. The latest reading compared to expectations for 70 in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 57% correlation between the y/y change in the home builders index and the y/y change in new home sales.

The index of present sales conditions in the housing market eased 1.3% (+4.2% y/y) to 75 and remained below its December high of 80. The index for conditions in the next six months slipped to 76 (+1.3% y/y), the lowest level since November.

Home builders reported that the traffic of prospective buyers index slipped m/m to 50 and was down from its December high of 58.

Amongst the regional indexes, the index for the Midwest fell 4.5% (-5.9% y/y) to 64 and was down versus the December high of 76. The index for the South declined 2.8% (+1.5% y/y) to 69 and was down from the high of 75 six months ago. Countering these declines was an 8.9% rise (32.6% y/y) in the index for the Northeast to 61. Its level equaled the highest point since December 2005. The reading for the West improved 1.3% (7.0% y/y) to 76 and made up its May decline.

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.

Some Industries Encountering Worker Shortages from the Federal Reserve Bank of Atlanta is available here.

National Association of Home Builders Jun May Apr Jun '17 2017 2016 2015
Composite Housing Market Index, SA (All Good=100) 68 70 68 66 68 61 59
 Single-Family Sales: Present 75 76 74 72 74 67 64
 Single-Family Sales: Next Six Months 76 77 77 75 76 67 66
 Traffic of Prospective Buyers 50 51 49 51 50 45 43
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