U.S. Home Builders Index Inches Higher to 2005 High

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo notched up during August to 61 (10.9% y/y) versus an unrevised July level of 60. It remained the highest level since November 2005 and matched expectations in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been an 80% correlation between the y/y change in the home builders index and the y/y change in single-family housing starts.

The index of single-family home sales improved to 66 (13.8% y/y), the highest level in ten years. The index of expected sales during the next six months held steady at 70, another decade high.

Realtors reported that their traffic index rose m/m to 45 but was down from the September high of 47.

Improvement in the housing market index reflected a higher reading in the West as it moved up 3.2% (16.1% y/y). The index for the Midwest gained 1.7% (-7.8% y/y) while the index for the South improved 1.6% (23.5% y/y). In the Northeast, the index fell 12.2% (+2.4% y/y).

The NAHB has compiled the Housing Market Index since 1985. It reflects 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 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 are included in Haver's SURVEYS database. The expectations figure is available in Haver's MMSAMER database.