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Economy in Brief

U.S. Home Builders Index Slips M/M; 2014 Edges Higher
by Tom Moeller  December 15, 2014

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo slipped to 57 this month and was unchanged y/y. Despite the m/m decline, the 2014 figure rose 2.5% after a nearly one-half increase in 2013. During the last ten years there has been an 82% correlation between the y/y % change in the home builders index and the y/y % change in single-family housing starts. The latest figure fell short of 59 expected in the Informa Global Markets Survey.

The index of single-family home sales edged lower to 61 (-3.2% y/y) and remained below the expansion high of 63 reached twelve months ago. The index of expected sales during the next six months also slipped to 65 (+4.8% y/y). The NAHB figures are seasonally adjusted.

Realtors reported that their traffic index held steady at 45, up 4.7% y/y.

Housing market activity slipped in most of the country. In the Northeast the index fell 9.8% m/m (+15.0% y/y). The index reading for the South fell 6.5% and was down 3.3% y/y. In the Midwest the reading fell 3.6% (-11.5% y/y) but in the West the index was up nearly one-quarter m/m (21.3% y/y).

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 Dec Nov Oct Dec'13 2014 2013 2012
Composite Housing Market Index, SA (All Good=100) 57 58 54 57 52 51 34
 Single-Family Sales: Present 61 62 57 63 56 55 36
 Single-Family Sales: Next Six Months 65 66 64 62 61 58 41
 Traffic of Prospective Buyers 45 45 41 43 39 39 27
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