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Economy in Brief

U.S. Home Builder Index Continues to Rise
by Tom Moeller  February 19, 2019

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo improved to 62 during February after increasing to 58 in January. Nevertheless, the figure remained below the expansion high of 74 in December of 2017.  Expectations had been for a smaller increase to 59 in the Informa Global Markets Survey. Each of the three index components improved this month. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 49% 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 rose to 67 in February after rising to 64 during January. The level of the index remained down from its peak of 80 in December 2017. The index of expected conditions in the next six months increased to 68 from 63. The recent peak in this index was 80 in February of last year.

The index of traffic of prospective buyers increased to 48 from 44. The index peaked at 58 in December 2017.

The rise in the overall index in February reflected improvement in the South. The index rose to 66 after being steady at 61 for two months. The index for the Midwest rose moderately to 55, but remained below the reading of 70 twelve months earlier. Elsewhere, the indexes fell. For the Northeast, the reading eased to 45 after a rise to 47 in January. The index for the West eased to 67 and has been moving sideways for three months.

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 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next months and 0.2722 for traffic of prospective buyers. The results are included in Haver's SURVEYS database. The expectations figure is available in Haver's MMSAMER database.

Changes in Labor Force Participation Help Explain Recent Job Gains from the Federal Reserve Bank of Dallas is available here.

National Association of Home Builders Feb Jan Dec Feb'18 2018 2017 2016
Composite Housing Market Index, SA (All Good=100) 62 58 56 71 67 68 61
 Single-Family Sales: Present 67 64 61 77 73 74 67
 Single-Family Sales: Next Six Months 68 63 61 80 74 76 67
 Traffic of Prospective Buyers 48 44 43 54 50 50 45
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