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Economy in Brief

U.S. Home Builder Index Falls Again in March
by Tom Moeller  March 16, 2022

• Decline is to lowest level in six months.

• Current & future sales indexes decline.

• Regional readings are mixed.

Housing market activity weakened this month. The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell to 79 in March after weakening to 81 in February, revised from 82. Down for the  third straight month, the decline compared to expectations for no change in the INFORMA Global Markets survey.

The index of expected sales in the next six months dropped to 70 in March from 80 in February, off 15.7% y/y. The index peaked at 89 in November 2020. The current sales reading fell to 86 from 89 and stood at its lowest since October 2021. The index measuring traffic of prospective buyers rose to 67 and made up half of its February fall. It was down 6.9% y/y.

Regional activity was varied in March. The index for the Northeast weakened to 60 (-30.2% y/y), its lowest point since June 2020. In the South, the home builder index fell to 80 (-2.4% y/y), down for the third straight month. To the upside, the home builders index rose m/m to 73 in the Midwest but has fallen 6.4% y/y. In the West, the home builders index held steady m/m and stood 3.4% higher 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 Mar Feb Jan Mar '21 2021 2020 2019
Composite Housing Market Index, SA (All Good=100) 79 81 83 82 81 70 66
 Single-Family Sales: Present 86 89 89 87 87 76 72
 Single-Family Sales: Next Six Months 70 80 82 83 82 74 72
 Traffic of Prospective Buyers 67 65 69 72 68 56 49
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