• Index declines for third straight month.

• Regional patterns are mixed.

• Home-buyer traffic weakens substantially.

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo declined 6.3% (-3.8% y/y) during August to 75 from 80 in July. An unchanged level of 80 was expected in the INFORMA Global Markets survey. The seasonally-adjusted index was 16.7% below the record high reached in November 2020. Over the past 15 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.

Performance amongst the composite index's three sub-series was mixed this month. The index of present sales conditions fell 5.8% (-3.6% y/y) to 81 from 86 in July. The level was 15.6% below last November's record high of 96. The index of expected sales over the next six months held steady (+3.8% y/y) at 81. The index measuring traffic of prospective buyers weakened 7.7% (-6.3% y/y) to 60, the lowest level since July of last year. The index was 22.1% below the cycle high of 77 in November 2020.

Performance within the four regions of the country was mixed this month. The index for the Northeast rose 4.1% and was unchanged y/y. That followed five straight monthly declines. The index for the West improved 1.2% (-3.4% y/y), the first increase in four months. The index for the South dropped 7.2% (-2.5% y/y) and was 14.4% below the November high. For the Midwest, the index fell 8.6% (-7.2% y/y) after holding steady in July. These regional series begin in December 2004.

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low." The figures are diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, 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 six months, and 0.2722 for traffic of prospective buyers. These data are included in Haver's SURVEYS database.