U.S. Home Builders Index Surges To Highest Level Since 2006

Improvement in the housing market is gaining momentum. The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo improved greatly to 52 in June from an unrevised May reading of 44. Expectations were for an unchanged 44. The index of single-family home sales increased to 56. The index of sales during the next six months picked up steam and gained to 61. Each of these levels is the highest since March 2006. Also, realtors were busy attempting to generate sales. The index of traffic of prospective home buyers jumped m/m to 40, its highest level since January 2006.

Improvement in activity occurred most everywhere in the country this month. The index for the Midwest jumped to 57 from 44 while the figure for the South gained to 53 from 44. The figure for the West also recovered to 50 after a decline in May to 41. In the Northeast, however, the index level slipped to 39 and remained down from the December high of 41. The NAHB figures are seasonally adjusted.

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 expectation figure is available in Haver's MMSAMER database.