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Economy in Brief

U.S. Home Builder Index Holds Steady
by Tom Moeller  July 17, 2018

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo was unchanged (+6.8% y/y) at 68 during July, which was unrevised. The latest reading compared to expectations for 69 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 held m/m at 74 (+5.7% y/y) and remained below its December high of 80. The index for conditions in the next six months declined 2.7% to 73. It was unchanged y/y at the lowest level since September of last year.

Home builders reported that the traffic of prospective buyers index improved m/m to 52, the highest level since February.

Amongst the regional indexes, the index for the South increased 2.9% (12.7% y/y) to 71, but remained below the December high of 75. The index for the Midwest held steady both m/m and y/y. Elsewhere in the country there was weakness. The index for the Northeast fell 3.4% (+16.7% y/y) to 56 and reversed the June rise. The reading for the West declined 3.9% (-1.4% y/y) to 73, the lowest level since June of last year.

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 Jul Jun May Jul '17 2017 2016 2015
Composite Housing Market Index, SA (All Good=100) 68 68 70 64 68 61 59
 Single-Family Sales: Present 74 74 76 70 74 67 64
 Single-Family Sales: Next Six Months 73 75 77 73 76 67 66
 Traffic of Prospective Buyers 52 50 51 48 50 45 43
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