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Economy in Brief

November U.S. Home Builder Index Rises to the Highest Level since May
by Winnie Tapasanun  November 16, 2021

• HMI increases for three straight months following three consecutive monthly declines.

• Present sales conditions and home-buyer traffic rise while expected sales are unchanged.

• Gains are evident in most regions.

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo rose 3.8% m/m (-7.8% y/y) to 83 in November after a 5.3% gain to 80 in October, registering the third consecutive monthly rise and the highest level since May. An unchanged level of 80 was expected in the INFORMA Global Markets survey. The seasonally-adjusted index was 7.8% below the record high reached in November 2020.

Two of the three HMI components rose this month. The index of present sales conditions increased 3.5% (-7.3% y/y) to 89 in November, the highest level since February, after a 4.9% rise to 86 in October. The level was 7.3% below last November's record high of 96. The index measuring traffic of prospective buyers rose 4.6% (-11.7% y/y) to 68, the highest level since June, after a 6.6% advance to 65. The index was 11.7% below the cycle high of 77 in November 2020. The index of expected sales over the next six months was at 84 (-5.6% y/y) in November and October, higher than 81 in the prior three successive months.

Most regional index readings advanced this month. The index for the Midwest rose 4.2% (-11.8% y/y) to 75, the highest level since April, on top of a 4.3% rise to 72. The index for the South was up 3.6% (-3.3% y/y) to 87 after a 5.0% gain to 84, still 3.3% below the November 2020 high. The index for the West rose 2.4% (-11.2% y/y) to 87, the highest reading since May, after a 6.3% gain to 85. To the downside, the index for the Northeast fell 5.5% (-14.8% y/y) to 69, the seventh m/m fall in nine months, after a 9.0% rebound to 73. 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. The Informa Global Markets survey is in Haver's MMSAMER database.

National Association of Home Builders Nov Oct Sep Nov '20 2020 2019 2018
Composite Housing Market Index, SA (All Good=100) 83 80 76 90 70 66 67
 Single-Family Sales: Present 89 86 82 96 76 72 73
 Single-Family Sales: Next Six Months 84 84 81 89 74 72 74
 Traffic of Prospective Buyers 68 65 61 77 56 49 50
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