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Economy in Brief

U.S. Home Builders Index Jumps to 2005 High
by Tom Moeller  December 15, 2016

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo surged to 70 during December (16.7% y/y) following unrevised stability at 63 in November. It was the highest level since July 2005. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 72% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The index of present conditions in the housing market firmed 10.1% to 76 (16.9% y/y). The index for the next six months increased 13.0% to 78 (18.2% y/y).

Home builders reported that the traffic index jumped 12.8% to 53 (15.2% y/y), also the highest level since July 2005.

Amongst the regional indexes, the index for the Northeast surged 25.5% (20.4% y/y). The index for West posted a 13.2% increase (14.7% y/y). In the Midwest, the index rose 11.9% (22.2% y/y). For the South, the index rose 7.7% (14.8% y/y).

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 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 six 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 Dec Nov Oct Dec'15 2016 2015 2014
Composite Housing Market Index, SA (All Good=100) 70 63 63 60 61 59 52
 Single-Family Sales: Present 76 69 69 65 67 64 56
 Single-Family Sales: Next Six Months 78 69 71 66 67 66 61
 Traffic of Prospective Buyers 53 47 46 48 45 43 39
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