U.S. Home Builder Index Weakens Again in December
by:Tom Moeller
|in:Economy in Brief
Summary
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Current sales decline but prospects pick up.
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Traffic of prospective buyers stabilizes.
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Index improves only in the South.
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell 6.1% (-63.1% y/y) during December to 31 from an unrevised 33 in November. It was the twelfth straight monthly decline. The index stood at the lowest index level since April 2020, which was near the lowest level since June 2012. The average level of the index in 2022 fell 27.3% from 2021. A December reading of 36 had been expected in the Informa Global Markets survey.
Performance amongst the components of the index was mixed this month. The index of present sales conditions fell 7.7% (-60.0% y/y) to 36. It was the eleventh decline in twelve months. The December level was 62.5% below the record-high of 96 in November 2020. The index of expected sales over the next six months improved 12.9% in December (-58.8% y/y). Nevertheless, the December level was 60.7% below the November 2020 peak. The index measuring traffic of prospective buyers held steady m/m (-71.8% y/y) at the lowest level since April 2020.
Among the regions of the country, the Housing Market Index in the South improved 6.1% (-60.7% y/y) to 35 following a 19.5% November fall. In the Northeast, the index held steady m/m (-60.0% y/y). In other regions, the index in the Midwest declined 14.3% (-60.5% y/y) to 30, the lowest level since April 2020. In the West, the index declined 10.7% (-71.3% y/y) and equaled the lowest level since January 2012.
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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