U.S. Home Builder Index Falls in September
by:Tom Moeller
|in:Economy in Brief
Summary
- Builder confidence continues to decline from December peak.
- Present & expected sales plus traffic fall further.
- Weakness is most pronounced in the West.
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo declined 6.1% during September (-39.5% y/y) to 46, remaining the lowest level since May 2020. The index is down 48.9% from its November 2020 high of 90. A reading of 48 had been expected in the INFORMA Global Markets survey.
All three HMI components continued to decline this month. The index of present sales conditions fell 5.3% (-34.1% y/y) to 54, the eighth decline in nine months. It followed two months of double-digit decline. The level was 43.8% below the record-high of 96 in November 2020. The index of expected sales over the next six months weakened 2.1% (-43.2% y/y) to 46, down for the fifth consecutive month. It stood at the lowest level since May 2020. The index measuring traffic of prospective buyers weakened 3.1% (-49.2% y/y) to 31, the sixth consecutive monthly decline this year.
Movement amongst the regional index readings was mixed this month. The index for the West weakened 19.0% (-57.5% y/y) to 34, the lowest level since April 2020. It was the fifth straight month of double-digit decline. In the South, the index weakened 5.5% (-35.0% y/y), off for the fifth straight month. The index for the Midwest held steady (-39.1% y/y) at 42 in September after falling sharply in both of the prior two months. The index for the Northeast also held steady (-28.4% y/y) at 48.0, its lowest level since June 2020. The regional series begin in 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. The Informa Global Markets survey is in Haver's MMSAMER database.
Tom Moeller
AuthorMore in Author Profile »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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