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Economy in Brief

U.S. Home Builders Index Dips
by Tom Moeller  July 18, 2016

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo eased to 59 in July from an unrevised 60 in June. The NAHB figures are seasonally adjusted. During the last ten years there has been an 72% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The index of present conditions in the housing market fell to 63 from 64 while the index for the next six months declined to 66 from 69. Both readings have been falling since their Q4'15 peaks.

Home builders reported that the traffic index also eased to 45 from 46, and remained below the Q4'15 high.

Movement in the regional indexes varied greatly. The index for the Northeast rose moderately m/m, but remained down sharply y/y. The West index rose slightly m/m, and sharply y/y. In the Midwest, the activity index also gained modestly m/m, but was down y/y. The index for the South fell m/m and 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.

Forecasting Interest Rates over the Long Run from the Federal Reserve Bank of New York is available here.

National Association of Home Builders Jul Jun May Jul'15 2015 2014 2013
Composite Housing Market Index, SA (All Good=100) 59 60 58 60 59 52 51
 Single-Family Sales: Present 63 64 63 65 64 56 55
 Single-Family Sales: Next Six Months 66 69 65 70 66 61 58
 Traffic of Prospective Buyers 45 46 44 43 43 39 39
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