U.S. Home Builder Index Increases in February

The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo rose 20.0% (-48.1% y/y) during February to 42 after rising 12.9% to 35 in January. It was the highest level since September 2022. A February reading of 37 had been expected in the Informa Global Markets survey.

Performance amongst the components of the index was uniformly strong this month. The index of current sales conditions rose 15.0% (-48.3% y/y) to 46. It also was the highest level in five months but remained well below the record-high of 96 in November 2020. The index of expected sales over the next six months improved 29.7% in February (-40.0% y/y) to 48, a seven-month high. The index measuring traffic of prospective buyers increased 26.1% (-55.4% y/y) after a 15.0% January improvement.

Amongst the regions of the country, the Housing Market Index in the Northeast rose 35.3% (-39.5% y/y) to 46, a four-month high. The index in the West increased 27.6% (-59.3% y/y) to 37, a six-month high. In the South, the index improved 15.4% (-46.4% y/y) to 45, the third straight month of increase. The index in the Midwest rose 12.5% (-49.3% y/y) to 36, a four-month high.

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.