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Economy in Brief

U.S. Home Builder Sentiment Continues to Increase
by Tom Moeller  September 17, 2019

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo rose to 68 in September from 67 during August. It was the highest level since October of last year, but it remained 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 75 this month from 73 in August. The figure compares to a low of 61 nine months ago. The index of expected conditions in the next six months eased to 70 from 71 in August. The index has been trending sideways for six months. The index measuring traffic of prospective buyers held steady m/m at 50 in September. It remained the highest figure since October.

Regional readings were uniformly positive this month. For the Northeast, the index surged to the highest level since May. In the South, the index was at the highest level since August of last year. The index for the Midwest remained at the highest point since October 2018. The index for the West edged higher and was sharply above the December low.

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 Sep Aug Jul Sep'18 2018 2017 2016
Composite Housing Market Index, SA (All Good=100) 68 67 65 67 67 68 61
 Single-Family Sales: Present 75 73 71 73 73 74 67
 Single-Family Sales: Next Six Months 70 71 71 74 74 76 67
 Traffic of Prospective Buyers 50 50 48 49 50 50 45
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