U.S. Home Builders’ Index Recovery Stuttering Again This Month

Since the spring recovery, housing activity has been roughly flat according to The National Association of Home Builders. They reported that its November Composite Housing Market Index held stable with a downwardly revised October reading. Though the index remained double the low of 8 this past January there's been little, if any, improvement during the last several months. The index is compiled from survey questions asking builders to rate market conditions as “good”, “fair”, “poor” or “very high” to “very low”. The figure is a diffusion index, therefore, numerical results over 50 indicate a predominance of “good” readings.

The present sales index held stable at 17 which equaled the 3Q average. In the West the index rose slightly and was sharply higher than one year ago. In the South the index also held stable m/m (+41.7% y/y). In the Northeast the index fell m/m but remained three-quarters higher than the year-ago level. In the Midwest the index also fell m/m but remained double last year. The sub-index of sales during the next six months rose slightly m/m and offset most of the October decline. · The Home Builders' Association also reported that traffic of prospective buyers held stable with October at the lowest level since July.</p><p>The Home Builders' Housing Opportunity Index, which is the share of homes sold that could be considered affordable to a family earning the median income, fell slightly in the second quarter. It had jumped earlier to a record high of 72.5% buoyed by lower home prices, lower interest rates and higher income. (There is a break in the series from 2002 to 2003.)

The NAHB has compiled the Housing Market Index since 1985. 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, along with other housing and remodeling indexes from NAHB Economics, are included in Haver’s SURVEYS database.