U.S. Home Builders Index Continues To Climb

The Composite Housing Market Index from the National Association of Home Builders/Wells Fargo rose this month to 37 from 35 in July. The latest figure was the highest since March 2007. The index of single-family home sales rose three points to 39, also the highest since 2007 but still down from levels near 70 in 2004. The index of sales during the next six months inched up to 44. Finally, the home builders' index of traffic of prospective buyers improved to 31, its highest since May 2006. By region, the Midwest index remained the strongest with a rise to 42, its highest in eight years. The South's index gained for the third month in the last four. To the downside, the index for the Northeast fell to its lowest since February while the West's dipped just slightly to 40. 

The index of prospective new home buyer traffic surged to 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.