Global| Oct 16 2018U.S. Home Builder Index Improves, but Remains Below Last Year's High
by:Tom Moeller
|in:Economy in Brief
Summary
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo inched up during October to 68 from an unrevised 67 in September. Despite the gain, the index remained below its December 2017 high of 74. [...]
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo inched up during October to 68 from an unrevised 67 in September. Despite the gain, the index remained below its December 2017 high of 74. Expectations had been for an index level of 67 in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 54% correlation between the y/y change in the home builders index and the y/y change in new home sales.
The index of present sales conditions improved to 74 in October from 73 during the prior two months. It remained down, however, from its peak of 80 last December. The index of expected conditions in the next six months increased to 75 this month, the highest level since June. The recent peak in this index was 80 in February.
The index of traffic of prospective buyers jumped to 53 from 49 and was the highest level since February. The index peaked at 58 in December last year.
Improvement in the overall index reflected broad-based regional gains throughout the country. The index for the Northeast region jumped to 64 this month, the highest level since October 2005. In the West, the index improved m/m to 75 but remained below the December high of 84. In the South, the index gained to 71 and recouped most of its September decline. For the Midwest, the housing market index held steady at 56, remaining well below the peak of 76 reached in December, 2017.
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 thus a diffusion index with numerical results six 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. The expectations figure is available in Haver's MMSAMER database.
| National Association of Home Builders | Oct | Sep | Aug | Oct '17 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| Composite Housing Market Index, SA (All Good=100) | 68 | 67 | 67 | 68 | 68 | 61 | 59 |
| Single-Family Sales: Present | 74 | 73 | 73 | 75 | 74 | 67 | 64 |
| Single-Family Sales: Next Six Months | 75 | 74 | 72 | 78 | 76 | 67 | 66 |
| Traffic of Prospective Buyers | 53 | 49 | 49 | 48 | 50 | 45 | 43 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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