The National Association of Home Builders reported that its July index of housing market activity inched up to 15 versus an unrevised 13 in June. Though the latest figure remained above the all-time low of 8 reached in January of 2009, it was at the low end of the recent range. The figure was slightly better than Consensus expectations for 14. During the last ten years there has been a 64% correlation between the y/y change in the index and the change in housing starts.

The Home Builders index is compiled from 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 over 50 indicating a predominance of "good" readings. During the last ten years there has been a 80% correlation between the y/y change in the index and the change in new plus existing single family home sales.

The index of single-family home sales reversed its June decline and rose to 15. However, it remained down from levels near 80 in 2004. The index of sales during the next six months recovered the declines of the prior two months. The home builders' index of traffic of prospective buyers held at its low for this year. By region, the indexes for the South and West recovered somewhat. Each of these NAHB figures is seasonally adjusted.

The Home Builders' Housing Opportunity Index, which is the share of homes sold that could be considered affordable to a family earning the median income, improved in Q1 to 74.6%, another record high, buoyed by lower home prices, lower interest rates and higher income. (There is a break in the series from 2002 to 2003.)

The NAHB has compiled the Housing Market Index since 1985.The weights assigned to the individual index components are .5920 for single family detached sales, present-time, .1358 for single family detached sales, next six months; and .2722 for traffic of prospective buyers. The results, along with other housing and remodeling indexes from NAHB Economics, are included in Haver's SURVEYS database. The expectation figure is available in Haver's MMSAMER database.

Understanding House-Price Dynamics from the Federal Reserve Bank of Philadelphia is available here.