Haver Analytics
Haver Analytics
| May 15 2024

U.S. Home Builder Index Declines Sharply in May

  • Current & future readings fall meaningfully.
  • Prospective home buyer traffic is depressed.
  • Regional declines are broad-based.

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell 11.8% during May (-10.0% y/y) to 45 from 51 in April. The reading fell short of expectations for 51 in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 65% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The May index of present sales conditions in the housing market weakened 10.5% (-8.9% y/y) to 51 after rising 1.8% in April. The index for conditions in the next six months fell 15.0% (-8.9% y/y) in May to 51 after declining 3.2% in April. Home builders reported that the traffic of prospective buyers’ index weakened 11.8% (-9.1% y/y) to 30, down from the recent high of 40 in July 2023.

Amongst the regional indexes for May, the index for the Midwest fell 2.0% from April (+16.7% y/y) while the index for the South declined 10.0% (-19.6% y/y). The index for the Northeast declined 10.8% this month (+28.9% y/y) and the reading for the West dropped 25.0% both m/m and 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 six 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 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.

  • Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio.   Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984.   He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C.   In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists.   Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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