U.S. Home Builders Index Strengthens to 2005 High

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo improved to 62 (5.1% y/y) from an unrevised August level of 61. It was the highest level since October 2005 and beat expectations for 61 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 67 (6.3% y/y), the highest level in ten years. The index of expected sales during the next six months eased to 68, the lowest level since May.

Realtors reported that their traffic index rose m/m to 47, the highest level in twelve months.

Improvement in the housing market index reflected a higher reading in the South as it moved up 4.8% (4.8% y/y). The index for the Northeast gained 4.5% (9.5% y/y) while the index for the Midwest improved 3.4%, unchanged y/y. In the West the index was stable m/m (6.6% 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.