U.S. Home Builder Index Unexpectedly Rebounds in January
Summary
- Home builder confidence improves to a three-month high after 12 straight m/m drops.
- All the three HMI components increase m/m with the largest in potential buyers' traffic (+15.0%).
- Regional increase is widespread with the biggest monthly gain in the West (+16.0%).
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo recovered 12.9% m/m (-57.8% y/y) to 35 in January after drops of 6.1% to 31 in December and 13.2% to 33 in November. The January reading was the first monthly increase since December 2021’s 1.2%. A reading of 31 had been expected in the INFORMA Global Markets survey. The January index was well below 83 in January 2022 and 61.1% below the record-high 90 in November 2020. The average HMI level was 59 in 2022, 81 in 2021, and 70 in 2020.
All the three HMI components increased this month. The index of present sales conditions rebounded 11.1% (-55.1% y/y) to 40 in January following 10 consecutive m/m declines. The latest reading was below 89 last January and 58.3% below the record-high 96 in November 2020. The index of expected sales over the next six months rose 5.7% (-54.9% y/y) to 37, the highest level since September, after a 12.9% December rebound to 35 and seven successive m/m drops. The January level was below 82 last January and 58.4% below the peak of 89 in November 2020. The index measuring traffic of prospective buyers gained 15.0% (-66.7% y/y) to 23 in January after holding steady at 20 and falling for eight straight months. The index was below 69 last January and 70.1% below the record-high 77 in November 2020.
All the regional HMIs posted m/m gains this month. The index for the West rebounded 16.0% (-67.4% y/y) to a four-month-high 29 in January vs. a 10.7% drop to 25 in December. The index for the South rose 11.4% (-54.7% y/y) to 39 following a 6.1% December increase and seven consecutive m/m falls. The index for the Midwest recovered 6.7% (-55.6% y/y) to 32 in January after three successive m/m drops. The index for the Northeast was up 6.3% (-52.1% y/y) to 34 this month after unchanged in December and a 31.9% slide in November. These 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.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has almost 20 years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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