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Economy in Brief

U.S. Home Builder Index Improves
by Tom Moeller  October 17, 2017

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo increased 6.3% to 68 during October and reversed its September decline. As a result of this month's increase, the index was at the highest level since April, up 7.9% y/y. 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 rose 7.1% to 75, up 8.7% y/y. The index for conditions in the next six months improved 6.8% to 78, up 9.9% y/y.

Home builders reported that the traffic of prospective buyers index reversed its September decline with a 2.1% m/m increase, up 4.3 y/y.

Amongst the regional indexes, the index for the Midwest rose 8.3% (12.1% y/y) while the index for the South increased 6.2% (6.2% y/y). For the West, the index fell 3.8% (+2.7% y/y) and for the Northeast, the index held steady (+8.7% 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 Oct Sep Aug Oct'16 2016 2015 2014
Composite Housing Market Index, SA (All Good=100) 68 64 67 63 61 59 52
 Single-Family Sales: Present 75 70 74 69 67 64 56
 Single-Family Sales: Next Six Months 78 73 77 71 67 66 61
 Traffic of Prospective Buyers 48 47 48 46 45 43 39
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