Global| Aug 17 2020U.S. Home Builder Sentiment Unexpectedly Surges to Record High in August
by:Tom Moeller
|in:Economy in Brief
Summary
• Housing market activity continues to strengthen. • Number of prospective buyers posts a new record. • Strength is broad-based regionally. The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo [...]
• Housing market activity continues to strengthen.
• Number of prospective buyers posts a new record.
• Strength is broad-based regionally.
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo increased to a record 78 during August from 72 in July. A reading of 74 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 rose to 84 in August and nearly matched its record high of 86 reached in December 1998. The index of expected conditions in the next six months rose to 78, a sixth-month high. The index measuring traffic of prospective buyers jumped m/m to a record 65.
Regional readings all improved. The index for the Northeast surged to 77, up from 17 in May. The index for the West rose to 88, nearly a record high. The index for the South improved to 79 and matched the February record. The index for the Midwest was little-changed at 70, up from 25 in April. These regional readings date back only to 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.
| National Association of Home Builders | Aug | Jul | Jun | Aug'19 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Composite Housing Market Index, SA (All Good=100) | 78 | 72 | 58 | 67 | 66 | 67 | 68 |
| Single-Family Sales: Present | 84 | 78 | 63 | 73 | 72 | 73 | 74 |
| Single-Family Sales: Next Six Months | 78 | 75 | 68 | 71 | 72 | 74 | 76 |
| Traffic of Prospective Buyers | 65 | 57 | 43 | 50 | 49 | 50 | 50 |
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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