U.S. Home Builder Index in Marked Downtrend
Summary
- Present & expected sales decline
- Traffic of prospective buyers weakens
- Housing market conditions actually edge upward in the Northeast
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo fell 8 points or 17.4% m/m in the October survey (-52.5% y/y) to 38, yet again the lowest level since May 2020. The index is down 57.8% from its November 2020 high of 90. A reading of 44 had been expected in the Informa Global Markets survey.
All three HMI components declined again this month. The index of present sales conditions fell f points or 16.7% (-47.7% y/y) to 45, the ninth decline in ten months. The October level was 53.1% below the record-high of 96 in November 2020. The index of expected sales over the next six months dropped 23.9% in October to 35 (-58.3% y/y), down for a sixth consecutive month. The October value is the lowest level since June 2012. The index measuring traffic of prospective buyers fell 19.4% (-61.5% y/y) to 25, the seventh consecutive monthly decline.
Among the regions of the country, the Housing Market Index actually rose in Northeast to 48 this month from 47 in September, a 2.1% increase (-34.2% y/y). The other regions all declined, with the largest reduction in the West, -26.5% in the month from 34 to 25 (-70.6% y/y). The index in the South was 41, down 21.2% in the month and 51.2% from a year ago. In the Midwest, the index was 38 in October, down 9.5% in the month and 47.2% in the year.
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.
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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