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Economy in Brief

U.S. Home Builder Index Slips in January
by Tom Moeller  January 18, 2022

• Decline reverses December improvement.

• Future sales & traffic fall but current sales hold steady.

• Weakness extends throughout the country except the West.

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell 1.2% in January to 83 (unchanged y/y) and reversed its December gain to 84. The decline followed four consecutive monthly increases. Stability had been expected in the INFORMA Global Markets survey.

The Home Builders indicated that "NAHB analysis indicates the aggregate cost of residential construction materials has increased almost 19% since December 2021," due to supply chain issues.

The index of expected sales in the next six months fell 2.4% and was unchanged y/y at 83. The index measuring traffic of prospective buyers fell 2.8% (+1.5% y/y) to 69 and reversed December's rise. The index of present sales conditions held steady both m/m and y/y at 90 in January.

This month's regional movement was mixed. The index for the Northeast fell 11.3% (+4.4% y/y) to 71 following a 15.9% December gain. In the South, the home builder index declined 2.2% (+6.1% y/y) to 87 and reversed December's rise. In the Midwest, the index fell 2.6% (-7.5% y/y) to 74 following a 1.3% December improvement. Rising 1.1% (-4.3% y/y) was the index for the West as it reversed December's decline. 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 Jan Dec Nov Jan '21 2021 2020 2019
Composite Housing Market Index, SA (All Good=100) 83 84 83 83 81 70 66
 Single-Family Sales: Present 90 90 89 90 87 76 72
 Single-Family Sales: Next Six Months 83 85 84 83 82 74 72
 Traffic of Prospective Buyers 69 71 69 68 68 56 49
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