U.S. Home Builder Index Strengthens in June
by:Tom Moeller
|in:Economy in Brief
Summary
Index improves to 11-month high. Current sales & traffic strengthen. Regional activity improves broadly.
The Composite Housing Market Index from the National Association of Home Builders-Wells Fargo rose 10.0% (-17.9% y/y) to 55 during June after increasing 11.1% to 50 in May. The index has risen by roughly three-quarters since a December low. A reading of 51 had been expected in the Informa Global Markets Survey. The NAHB figures are seasonally adjusted. During the last ten years, there has been a 72% 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 8.9% in June (-19.7% y/y) to 61. At the highest level since last July, the index is up just over two-thirds since a December low. The June index for conditions in the next six months increased 10.7% (1.6% y/y) to 62, the highest level since May of last year.
Home builders reported that the traffic index of prospective buyers rose 12.1% in June (-22.9% y/y) to 37, the highest level since last July, up 85.0% from the December low.
Amongst the regional indexes, the index for the Midwest gained 14.3% this month (-12.7% y/y) following a 5.0% May rise while the index for the South improved 7.1% (-20.0% y/y) for June after rising 12.0% in May. The index for the Northeast improved 15.6% this month (-16.1% y/y) after a 2.2% gain and the reading for the West rose 4.2% (-21.9% y/y) after rising 20.0% in May.
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.
These results are included in Haver’ SURVEYS database. The expectation figure is available in Haver’s MMSAMER database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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