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Economy in Brief

U.S. Home Builder Index Recovers
by Tom Moeller  May 15, 2018

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo increased 2.9% (1.4% y/y) to 70 during May following an April decline to 68. The latest reading compared to expectations for 69 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 increased 2.7% to 76 (1.3% y/y), but remained below its December high of 80. The index for conditions in the next six months held steady at 77 (1.3% y/y) and equaled the lowest level since November.

Home builders reported that the traffic of prospective buyers index was stable m/m at 51 and was unchanged y/y.

Amongst the regional indexes, the index for the Midwest increased 7.9% (4.6% y/y) to the highest level in three months. The index for the South eased 1.4% to the lowest level since October and was unchanged y/y. The reading for the West fell 1.3% (-6.3% y/y) and the index for the Northeast held steady, up 17.0%.

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 May Apr Mar May '17 2017 2016 2015
Composite Housing Market Index, SA (All Good=100) 70 68 70 69 68 61 59
 Single-Family Sales: Present 76 74 77 75 74 67 64
 Single-Family Sales: Next Six Months 77 77 78 78 76 67 66
 Traffic of Prospective Buyers 51 51 51 51 50 45 43
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