U.S. Home Builders Index Increases to Five-Month High

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo rose to 60 during June, the highest level since January. Nevertheless, it remained down from the October peak of 65. The NAHB figures are seasonally adjusted. During the last ten years, there has been an 81% 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 rose to 64 (-1.5% y/y) from 63. The index of expected sales during the next six months jumped to 70 (1.4% y/y), the highest level since October. The index remained down, however, from the October high of 75.

Home builders reported that their traffic index strengthened to 47 (6.8% y/y), up from the February low of 39.

Movement in the Composite Index reflected sharp divergence in the regional measures. The index in the Northeast increased 8.3% (-17.0% y/y) to 39. In the South, the index rose 6.7% (1.6% y/y) to 64. The index for the West rose 4.5% (14.8% y/y) to 70. To the downside was the index in the Midwest, falling 6.7% (-1.8% y/y) to 56.0.

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.