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Economy in Brief

U.S. Home Builders Index Eases
by Tom Moeller  January 18, 2017

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell to 67 during January (+9.8% y/y) following a revised jump to 69 in December, initially reported as 70. It remained near the highest level since July 2005. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 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 4.0% to 72 (+5.9% y/y). The index for the next six months declined 2.6% to 76 (+18.8% y/y).

Home builders reported that the traffic index slipped 1.9% to 51 (+15.9% y/y), but still was near the highest level since July 2005.

Amongst the regional indexes, the index for the Northeast fell 8.8% (+10.6% y/y). The index for West posted a 12.8% decline (+2.7% y/y). For the South, the index fell 4.3% (+11.7% y/y). In the Midwest, the index remained steady (11.9% 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 six 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 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 Jan Dec Nov Jan'16 2016 2015 2014
Composite Housing Market Index, SA (All Good=100) 67 69 63 61 61 59 52
 Single-Family Sales: Present 72 75 69 68 67 64 56
 Single-Family Sales: Next Six Months 76 78 69 64 67 66 61
 Traffic of Prospective Buyers 51 52 47 44 45 43 39
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