The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo edged up to 65 in July from 64 in June, reversing half of its June decline. Compared with a year ago, the index is 3 points lower and remains below the expansion high of 74 reached in December of 2017. 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 new plus existing home sales.

Each of the index components edged up this month. The index of present sales conditions rose to 72 from 71 in June. The index of expected conditions in the next six months inched up to 71 from 70 in June. The index measuring traffic of prospective buyers increased slightly to 48 from 47.

Regional readings were generally weak with declines in both the Northeast and the Midwest and only a modest one-point rise in the South. In contrast, the index for the West posted a sharp six-point rise to 75, its highest reading since June 2018.

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 a diffusion index with numerical results 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.