U.S. Home Builders Index Climbs To Highest Level Since 2006

The Composite Housing Market Index from the National Association of Home Builders/Wells Fargo increased three points this month to 40. The latest figure was the highest since June 2006. The index of single-family home sales rose four points to 42, also the highest since 2006 but still down from levels over 70 in 2004. The index of sales during the next six months surged to 51. Finally, the home builders' index of traffic of prospective buyers gained slightly to 31, its highest since May 2006. By region, the Midwest index remained strong with a rise to 45, its highest level since 2005. The West's index likewise rose to 45 while the South's index was its highest level since 2007. The Northeast's index recovered most of its August decline with an increase to 32. 

The index of prospective new home buyer traffic was little-changed at 31, its highest level since May 2005. Each of these NAHB figures is seasonally adjusted. The Home Builders' Housing Opportunity Index, which is the share of homes sold that could be considered affordable to a family earning the median income, fell in Q2'12 and reversed six months of improvement. (There is a break in the series from 2002 to 2003.)

The Home Builders index is compiled from 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 over 50 indicating a predominance of "good" readings.

The NAHB has compiled the Housing Market Index since 1985. The weights assigned to the individual index components are .5920 for single family detached sales, present-time, .1358 for single family detached sales, next six months; and .2722 for traffic of prospective buyers. The results, along with other housing and remodeling indexes from NAHB Economics, are included in Haver's SURVEYS database. The expectation figure is available in Haver's MMSAMER database.