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Economy in Brief

U.S. Home Builders Index Is Loosing Upward Momentum
by Tom Moeller  May 18, 2015

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo retreated to 54 in May (+20.0% y/y) following unrevised improvement to 56 in April. The index has moved slightly lower since reaching a ten-year peak last September. 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 expectations for 57 in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted.

The index of single-family home sales slipped to 59 (+22.9% y/y) and has trended sideways following improvement early in 2014. The index of expected sales during the next six months notched higher to 64 (14.3% y/y), its highest level this year.

Realtors reported that their traffic index retreated to 39 and remained nearly 20% below last year's peak.

Weakness in housing market activity centered in the Midwest this month as the index fell 7.3% to 51 (+13.3% y/y) after an 8.3% April fall. In the Northeast, the index moved sideways (22.9% y/y) after recovering 16.2% in April. The index for the South also remained unchanged (25.5% y/y), following improvement in April. Showing strength was the West where the index rose 1.8% (27.3% y/y) following a like improvement in April.

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 May Apr Mar May'14 2014 2013 2012
Composite Housing Market Index, SA (All Good=100) 54 56 52 45 52 51 34
 Single-Family Sales: Present 59 61 58 48 56 55 36
 Single-Family Sales: Next Six Months 64 63 59 56 61 58 41
 Traffic of Prospective Buyers 39 40 37 33 39 39 27
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