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Economy in Brief

U.S. Home Builders Index Deteriorates
by Tom Moeller  February 16, 2016

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo declined 4.9% to 58, the lowest level in nine months. January's level of 61 was revised up slightly. The NAHB figures are seasonally adjusted. During the last ten years, there has been an 81% correlation between the y/y change in the home builders index and the y/y change in single-family housing starts.

The index of single-family home sales fell 4.4% (+6.6% y/y) to 65, and reversed its January improvement. Offsetting this decline, however, was a rise in the index of expected sales during the next six months. It rose 1.6% to 65 (10.2% y/y) and reversed most of the prior month's fall.

Home builders reported that their traffic index fell sharply for the third straight month. The 11.4% m/m decline left the level of traffic unchanged from a year earlier.

The housing market index easing reflected declines throughout the country. In the West, the index fell 6.8% (+6.3% y/y), down for the third consecutive month. The index for the South declined 5.0% (+1.8% y/y) to the lowest level since March. In the Midwest, the index was off 3.4% (+18.8% y/y) and reversed roughly half of a strong January gain. The reading for the Northeast fell 4.3% (-2.2% y/y) to the lowest level in six months.

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'15 2015 2014 2013
Composite Housing Market Index, SA (All Good=100) 58 61 60 55 59 52 51
 Single-Family Sales: Present 65 68 65 61 64 56 55
 Single-Family Sales: Next Six Months 65 64 66 59 66 61 58
 Traffic of Prospective Buyers 39 44 46 39 43 39 39
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