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Economy in Brief

U.S. Home Builder Index Slips
by Tom Moeller  March 15, 2018

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo eased to 70 during March from 71 in February, revised from 72. It was the lowest figure since November. The reading compared to expectations for 71 in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 65% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The index of present sales conditions in the housing market held steady at 77 and were unchanged y/y. The index for conditions in the next six months fell to 78 following February's rise to the highest level since June 2005.

Home builders reported that the traffic of prospective buyers index declined to 51 (-3.8% y/y) but remained up sharply from the average of 12 in 2010.

Amongst the regional indexes, the index for the Midwest declined 7.1% (-9.7% y/y) to the lowest level since November. The index for the South improved slightly after two months of stability (+4.2% y/y). The index for the Northeast increased 1.8% (5.7% y/y) and the reading for the West also rose slightly (+1.3% 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 Mar Feb Jan Mar '17 2017 2016 2015
Composite Housing Market Index, SA (All Good=100) 70 71 72 71 68 61 59
 Single-Family Sales: Present 77 77 79 77 74 67 64
 Single-Family Sales: Next Six Months 78 80 78 78 76 67 66
 Traffic of Prospective Buyers 51 54 54 53 50 45 43
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