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Economy in Brief

U.S. Home Builders Index Moves Lower
by Tom Moeller  February 17, 2015

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo declined to 55 in February (+19.6% y/y) from an unrevised 57 in January. It was the lowest figure since October. During the last ten years, there has been an 80% 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 58, expected in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted.

The index of single-family home sales slipped m/m to 61 (+19.6% y/y). It's been fairly steady at that level for the last several months. The index of expected sales during the next six months was unchanged at 60 (11.1% y/y). It was, however, the lowest reading since June.

Realtors reported that their traffic index declined sharply to 39, the lowest level since July. The figure was, nevertheless, 25.8% higher than twelve months ago.

Housing market activity was mixed around the country this month. In the Midwest, the reading fell 16.9% m/m but was unchanged y/y. In the West, the index fell 1.5% (+10.3% y/y) but in the South it was unchanged (21.7% y/y). The index reading in the Northeast improved 11.6% (41.2% 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 Feb Jan Dec Feb'14 2014 2013 2012
Composite Housing Market Index, SA (All Good=100) 55 57 58 46 52 51 34
 Single-Family Sales: Present 61 62 62 51 56 55 36
 Single-Family Sales: Next Six Months 60 60 64 54 61 58 41
 Traffic of Prospective Buyers 39 44 46 31 39 39 27
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