• Building activity is currently slower than last autumn.

• Activity is mixed regionally.

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo was unchanged this month at 83, after rising slightly in April from 82 in March. Stability was expected m/m in the INFORMA Global Markets survey. The seasonally-adjusted index reached a record of 90 last November. Over the past 15 years, there has been a 70% correlation between the y/y change in the home builders index and the y/y change in new plus existing home sales.

Performance amongst the composite index's three components was mixed this month. The index of present sales conditions remained at 88, after rising slightly from 87 in March. The index of expected sales six months improved modestly to 81 and reversed a piece of its April decline. The index measuring traffic of prospective buyers slipped 1.4% m/m but remained down 5.2% from the cycle high in November.

Regional index performance also varied in May. The index for the Northeast fell 8.3%, down for the third straight month. The index for the Midwest declined 4.0% m/m and was down 4.9% over the last six months. The index for the South rose 2.4% for the second straight month. The index for the West held steady m/m but was 7.1% below the November high. These regional series begin in December 2004.

Record-High Prices on all Building Materials Threaten Housing Affordability from the National Association of Home Builders can be found here.

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low." The figures are diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, 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 six months, and 0.2722 for traffic of prospective buyers. These data are included in Haver's SURVEYS database.