Global| Nov 18 2019U.S. Home Builder Sentiment Remains Firm
by:Tom Moeller
|in:Economy in Brief
Summary
Following four consecutive months of increase, the Composite Housing Market Index from the National Association of Home Builders-Wells Fargo eased during November. The 1.4% decline from October to 70 left the index up 16.7% y/y, and [...]
Following four consecutive months of increase, the Composite Housing Market Index from the National Association of Home Builders-Wells Fargo eased during November. The 1.4% decline from October to 70 left the index up 16.7% y/y, and up by one-quarter since the December 2018 low. The latest figure was slightly below the expansion high of 74 reached in December 2017. Stability at 71 had been expected in the INFORMA Global Markets survey. The NAHB figures are seasonally adjusted. Over the past 15 years, there has been a 70% correlation between the y/y change in the home builders index and the y/y change in new plus existing home sales.
The index of present sales conditions fell 2.8% to 76 (+13.4% y/y) from 78 in October. It remained 24.6% above the low of 61 reached last December. The index of expected conditions in the next six months increased 1.3% (18.5% y/y) to 77 following an 8.6% October rise. The index measuring traffic of prospective buyers eased 1.9% (+17.8% y/y) to 53 this month from October's 54. It has increased 23.3% since the December low.
Regional readings indicated a 5.0% increase (21.2% y/y) in the Northeast to 63. In the West the index gained 2.8% (30.8% y/y) to 85, the highest level since December 2016. In the Midwest the index rose 1.8% (7.4% y/y) after two consecutive months of decline. The index for the South declined 2.6% (+13.8% y/y) but remained near the expansion high.
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.
| National Association of Home Builders | Nov | Oct | Sep | Nov Y/Y | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| Composite Housing Market Index, SA (All Good=100) | 70 | 71 | 68 | 16.7% | 67 | 68 | 61 |
| Single-Family Sales: Present | 76 | 78 | 75 | 13.4 | 73 | 74 | 67 |
| Single-Family Sales: Next Six Months | 77 | 76 | 70 | 18.5 | 74 | 76 | 67 |
| Traffic of Prospective Buyers | 53 | 54 | 50 | 17.8 | 50 | 50 | 45 |
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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