U.S. Home Builders’ Index Dips Again

According to The National Association of Home Builders, housing market activity slipped again from its earlier improved level. The Association  reported that its January Composite Housing Market Index edged lower to 15 from 16 in December and from 19 last September. Nevertheless, the index remained nearly double the low of 8 last January. The 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 a diffusion index, therefore, numerical results over 50 indicate a predominance of “good” readings. In the West the index fell hard to a reading of 16 from 19 in December but remained up by four times since January '09. In all other regions the m/m declines were moderate and levels remained up sharply from January 2009.

The present sales index slipped to 15 which was down from the August high but the sub-index of sales during the next six months held steady  m/m. Improvement from 2009 was moderate. The Home Builders' Association also reported that traffic of prospective buyers slipped from December to the lowest level since March.

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 3Q '09 to 70.1%. It had jumped earlier to a record high of 72.5% buoyed by lower home prices, lower interest rates and higher income. (There is a break in the series from 2002 to 2003.)

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.