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Economy in Brief

U.S. Home Builder Index Declines
by Tom Moeller  September 18, 2017

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell 4.5% to 64 during September and reversed its 4.7% August increase, which was lessened after revision. As a result of this month's decline, the index was down 1.5% y/y, its first negative y/y comparison since October 2016. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 67% correlation between the y/y change in the home builders index and the y/y change in housing starts.

The index of present sales conditions in the housing market fell 5.4% (-1.4% y/y) to 70 and matched the lowest level since November. The index for conditions in the next six months declined 5.2% (+2.8% y/y) to 73, equaling the lowest level also since November.

Home builders reported that the traffic of prospective buyers index eased 2.1% m/m to 47 and was unchanged y/y.

Amongst the regional indexes, the index for the Midwest dropped 9.2% (+3.5% y/y) while the index for the South fell 5.8% (-4.4% y/y). For the West, the index rose 2.6% (-3.7% y/y) and for the Northeast the index gained 2.0% (19.0% 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 six 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 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 Sep Aug Jul Sep'16 2016 2015 2014
Composite Housing Market Index, SA (All Good=100) 64 67 64 65 61 59 52
 Single-Family Sales: Present 70 74 70 71 67 64 56
 Single-Family Sales: Next Six Months 73 77 73 71 67 66 61
 Traffic of Prospective Buyers 47 48 48 47 45 43 39
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