U.S. Home Builders Index Remains Unchanged

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo held at 58 for the third straight month. It remained down from the October high 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 declined 3.1% to 63 (+3.3% y/y), its lowest point since May. Offsetting this decline was 1.6% improvement to 62 (-1.6% y/y) in the index of expected sales during the next six months. The index remained down, however, from its high of 75, six months ago.

Home builders reported that their traffic index improved 2.3% to 44 (10.0% y/y) which returned it to January's level.

Movement in the Composite Index reflected sharp divergence in the regional measures. In the West, the index of activity held steady for a second month (+21.8% y/y), while the index for the South also was stable both m/m and y/y. The reading for the Midwest declined 5.1% (+1.8% y/y), but the index for the Northeast dropped 10.9% (-4.7% 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.