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Economy in Brief

U.S. Home Builders Index Strengthens to 2005 High
by Tom Moeller  March 15, 2017

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo jumped 9.2% to 71 during March (22.4% y/y) following two months of decline. It was the highest reading since June 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 recovered 9.9% to 78 (20.0% y/y). The index for conditions in the next six months improved 6.8% to 78 (27.9% y /y).

Home builders reported that the traffic index jumped 17.4% to 54 (25.6% y/y), the highest level since July 2005.

Amongst the regional indexes, the index for the Northeast improved 35.9% (15.2% y/y). For the South, the index recovered 12.5% (22.0% y/y). In the Midwest, the index rose 14.1% (23.7% y/y). The index for the West nudged 1.3% higher (14.9% 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 Mar Feb Jan Mar'16 2016 2015 2014
Composite Housing Market Index, SA (All Good=100) 71 65 67 58 61 59 52
 Single-Family Sales: Present 78 71 72 65 67 64 56
 Single-Family Sales: Next Six Months 78 73 76 61 67 66 61
 Traffic of Prospective Buyers 54 46 51 43 45 43 39
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