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Economy in Brief

U.S. Home Builders Index Registers Historic Decline Due to Snowfall
by Tom Moeller  February 18, 2014

Heavy snowfall this month depressed the Composite Housing Market Index from the National Association of Home Builders-Wells Fargo by 10 points versus January to 46. The m/m decline was the largest in the series history and the index stood at the lowest level in nine months. The latest reading disappointed expectations for stability at 56. The index of single-family home sales dropped 11 points to 51 while the index of sales during the next six months dropped a lesser 6 points to 60. The NAHB figures are seasonally adjusted.

Realtors reported that their traffic index of prospective buyers evaporated by 9 points to 31, the lowest level since April.

Activity fell sharply around the country. Activity in the West took the largest hit and the 14 point decline reversed the gains of the prior two months. The index for the Midwest followed with a 9 point drop to the lowest level in 9 months. The 8 point decline in the index for the Northeast lowered it to the lowest point since October. Finally, the 7 point decline in the South repeated its January downdraft.

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 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 six 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.

National Association of Home Builders Feb Jan Dec Feb'13 2013 2012 2011
Composite Housing Market Index, SA (All Good=100) 46 56 57 46 51 34 16
 Single-Family Sales: Present 51 62 63 51 55 36 16
 Single-Family Sales: Next Six Months 54 60 62 50 58 41 22
 Traffic of Prospective Buyers 31 40 43 32 39 27 13
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