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Economy in Brief

U.S. Home Builder Index Falls Again
by Tom Moeller  July 18, 2017

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo declined 3.0% to 64 during July following a June fall of 4.3% fall to 66, revised from -2.9%. Despite five m/m declines this year, the index remained 10.3% higher y/y. 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 for conditions in the next six months fell 2.7% (+10.6% y/y) to 73. The index of present conditions in the housing market dropped 2.8% (+11.1% y/y) to 70. Both declines were the fifth this year.

Home builders reported that the traffic index eased 2.0% m/m to 48, but remained 6.7% higher y/y. The index has fallen in all but one month this year.

Amongst the regional indexes, the index for the Northeast rose 4.3% (17.1% y/y). The index for the West similarly rose 4.2% m/m (5.7% y/y), but the South's index decreased 7.4% (+5.0% y/y). In the Midwest, the index declined 5.9% (14.3% 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 Jul Jun May Jul'16 2016 2015 2014
Composite Housing Market Index, SA (All Good=100) 64 66 69 58 61 59 52
 Single-Family Sales: Present 70 72 75 63 67 64 56
 Single-Family Sales: Next Six Months 73 75 78 66 67 66 61
 Traffic of Prospective Buyers 48 49 51 45 45 43 39
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