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Economy in Brief

U.S. Home Builder Sentiment Increases
by Tom Moeller  April 16, 2019

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo rose to 63 during April after improved readings of 62 in the prior two months. The index remained up from the December low of 56, but below the expansion high of 74 reached in December of 2017. The increase was as expected in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 57% correlation between the y/y change in the home builders index and the y/y change in new plus existing home sales.

The performance of the three index components was mixed this month. The index of present sales conditions rose to 69, its highest level since October. The level of the index remained down, however, from its peak of 80 in December 2017. The index of expected conditions in the next six months slipped to 71. The recent peak in this index was 80 in February of last year.

The index measuring traffic of prospective buyers rose to 47 but remained below the peak of 58 reached in December 2017.

The rise in the overall April index reflected mixed performance amongst regions of the country. For the Northeast, the reading rose sharply m/m to 56, up from its low of 36 in December. The index for the West improved to 72, its highest level in six months. The reading for the Midwest rebounded to 56, also its highest level in six months. Easing to 66 was the reading for the South, reversing its March rise.

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 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next months and 0.2722 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 Apr Mar Feb Apr'18 2018 2017 2016
Composite Housing Market Index, SA (All Good=100) 63 62 62 68 67 68 61
 Single-Family Sales: Present 69 68 66 74 73 74 67
 Single-Family Sales: Next Six Months 71 72 68 77 74 76 67
 Traffic of Prospective Buyers 47 44 48 51 50 50 45
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