Global| Nov 17 2020U.S. Single Family Home Builder Sentiment Notches Another Record
Summary
• Diffusion index rises to record high 90 in November. • All three subcomponents -- present and forward-looking sales as well as foot traffic -- all increase to records. • Three out of four regions improve, only exception Northeast. [...]
• Diffusion index rises to record high 90 in November.
• All three subcomponents -- present and forward-looking sales as well as foot traffic -- all increase to records.
• Three out of four regions improve, only exception Northeast.
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo increased to a record 90 during November from the previous high of 85 in October (data goes back to 1985). The INFORMA Global Markets survey anticipated an unchanged reading. Sentiment hit an eight-year low of 30 in April; though was meaningfully above 2007 through 2011 levels.
The index of present sales conditions increased 96 in November. The index of expected conditions in the next six months edged up to 89, while traffic of prospective buyers improved to 77. All of these are records. Three out of the four regions rose to record highs led by the West at 98, the South at 90 and the Midwest at 85. Sentiment for the Northeast declined to 82 from October's record 87. These regional readings date back only to December 2004.
The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low." The figures are diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, the weights assigned to the individual index components are: 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next six months, and 0.2722 for traffic of prospective buyers. These data are included in Haver's SURVEYS database.
| National Association of Home Builders | Nov | Oct | Sep | Nov'19 | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| Composite Housing Market Index, SA (All Good=100) | 90 | 85 | 83 | 71 | 66 | 67 | 68 |
| Single-Family Sales: Present | 96 | 90 | 88 | 77 | 72 | 73 | 74 |
| Single-Family Sales: Next Six Months | 89 | 88 | 85 | 78 | 72 | 74 | 76 |
| Traffic of Prospective Buyers | 77 | 74 | 74 | 54 | 49 | 50 | 50 |
Gerald D. Cohen
AuthorMore in Author Profile »Gerald Cohen provides strategic vision and leadership of the translational economic research and policy initiatives at the Kenan Institute of Private Enterprise.
He has worked in both the public and private sectors focusing on the intersection between financial markets and economic fundamentals. He was a Senior Economist at Haver Analytics from January 2019 to February 2021. During the Obama Administration Gerald was Deputy Assistant Secretary for Macroeconomic Analysis at the U.S. Department of Treasury where he helped formulate and evaluate the impact of policy proposals on the U.S. economy. Prior to Treasury, he co-managed a global macro fund at Ziff Brothers Investments.
Gerald holds a bachelor’s of science from the Massachusetts Institute of Technology and a Ph.D. in Economics from Harvard University and is a contributing author to 30-Second Money as well as a co-author of Political Cycles and the Macroeconomy.
