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Economy in Brief

U.S. Home Builder Sentiment Improves Slightly
by Tom Moeller  August 16, 2019

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo rose to 66 in August from 65 during July. The index has been trending higher since its December 2018 low, but 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.

The index of present sales conditions rose to 73 this month from 71 in July. It was 12 points above December's low. The index of expected conditions in the next six months eased to 70 from 71 in July. The index measuring traffic of prospective buyers strengthened to 50 in August from 48 in July. It was the highest measure since October.

Regional readings mostly improved this month. The index for the Midwest posted a strong increase to the highest level since October 2018. The index for the Northeast and for the West edged higher. In the South, the index held steady and has been trending sideways since March.

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.

National Association of Home Builders Aug Jul Jun Aug'18 2018 2017 2016
Composite Housing Market Index, SA (All Good=100) 66 65 64 67 67 68 61
 Single-Family Sales: Present 73 71 71 73 73 74 67
 Single-Family Sales: Next Six Months 70 71 70 72 74 76 67
 Traffic of Prospective Buyers 50 48 47 49 50 50 45
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