U.S. Home Builders Index Stands at 2005 High

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo jumped 10.2% during September to 65 (6.7% y/y) following modest improvement to 59 in August, revised from 60. The latest reading matched the highest level since October 2005. The NAHB figures are seasonally adjusted. During the last ten years, there has been an 72% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The index of present conditions in the housing market rose to an expansion high of 71 (6.0% y/y), while the index for the next six months increased also to 71 (4.4% y/y).

Home builders reported that the traffic index improved 9.1% to 48 (2.1% y/y). This latest figure matched the highest level since October 2005.

Improvement in the regional indexes was strongest in the West with a 20.6% jump (26.2% y/y) to a cycle high. The index in the South increased 6.3% (3.0% y/y), also to a ten-year high. A 5.7% rise (-8.2% y/y) in the Midwest recovered the August decline; the index has moved sideways since 2013. A 2.4% rise (-6.5% y/y) in the Northeast repeated the prior month's rise, but left the index 17.3% below the October high.

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.