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Economy in Brief

U.S. Home Builder Index Edges Higher in December
by Tom Moeller  December 15, 2021

• Index increases for fourth consecutive month.

• Present sales & traffic increase but expected sales hold steady.

• Strength in Northeast & South account for the overall increase.

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo rose 1.2% (-2.3% y/y) to 84 in December after a 3.8% gain to 83 in November. It was the fourth consecutive monthly increase to the highest level since February. During all of this year, the index rose 16.0% versus 2020. The latest monthly increase matched expectations in the INFORMA Global Markets survey.

The index of present sales conditions increased 1.1% (-2.2% y/y) to 90 in December. It was the highest level also since February after a 3.5% November rise to 89. For all of 2021 the index rose 14.7% versus 2020. The index measuring traffic of prospective buyers rose 1.4% (-4.1% y/y) to 70, the highest level in six months. The index rose 22.8% during all of 2021. The index of expected sales over the next six months held steady m/m (-1.2% y/y) at 84 in December. During all of 2021, the expected sales index rose 11.0% y/y.

This month's regional movement was mixed m/m. The index for the Northeast rose 14.5% (1.3% y/y) following a 5.5% November decline. For all of 2021, the index rose 22.0% from 2020 to 76.0. In the South, the home builder index increased 2.3% both m/m and y/y to 89 after a 3.6% November increase. For all of last year, the index improved 15.5% to 83. Elsewhere in the country, the home builder index declined during December. In the Midwest, it fell 1.3% (-9.8% y/y) to 74. For 2021 as a whole, the index rose 15.2% from 2020 to 73.0. The index for the West declined 1.1% (-9.4% y/y) to 87 after a 3.5% gain in November. For all of last year the index rose 12.2% to 87. These regional series begin in December 2004.

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. The Informa Global Markets survey is in Haver's MMSAMER database.

National Association of Home Builders Dec Nov Oct Dec '20 2021 2020 2019
Composite Housing Market Index, SA (All Good=100) 84 83 80 86 81 70 66
 Single-Family Sales: Present 90 89 86 92 87 76 72
 Single-Family Sales: Next Six Months 84 84 84 85 82 74 72
 Traffic of Prospective Buyers 70 69 65 73 68 56 49
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