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Economy in Brief

U.S. Home Builder Index Eases in February
by Tom Moeller  February 16, 2022

• Decline adds to January weakening.

• Future sales & traffic fall again but current sales improve.

• Regional changes are mixed.

Housing market activity is mixed this month. The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell to 82 in February after an unrevised weakening to 83 in January. The decline matched expectations in the INFORMA Global Markets survey.

The index of expected sales in the next six months dropped to 80 in February from 82 in January but was stable y/y. The index peaked at 89 in November 2020. The index measuring traffic of prospective buyers fell sharply to 65 from 69 and was down 9.7% y/y. The present sales conditions index improved to 90 this month from 89 in January, but was unchanged y/y.

February's regional activity is mixed too. The index for the Northeast rose to 78 this month from January's 71 but was down 10.3% y/y. In the West, the index increased to 91 from 89 and was unchanged y/y. Elsewhere in the country there was weakness this month. In the South, the home builder index fell for the second straight month but improved 2.4% y/y. In the Midwest, the index also fell for the second straight month and was down 12.3% y/y. 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 Feb Jan Dec Feb '21 2021 2020 2019
Composite Housing Market Index, SA (All Good=100) 82 83 84 84 81 70 66
 Single-Family Sales: Present 90 89 90 90 87 76 72
 Single-Family Sales: Next Six Months 80 82 85 80 82 74 72
 Traffic of Prospective Buyers 65 69 71 72 68 56 49
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