U.S. Home Builders Sentiment Declines Further in July
by:Tom Moeller
|in:Economy in Brief
Summary
- Overall index stands at lowest level this year.
- Each component remains weak.
- Regional indexes diverge.
The Housing Market Index compiled by the National Association of Home Builders/Wells Fargo declined 2.3% (-25.0% y/y) to 42 in July. It has been below the break-even point of 50 for three straight months after averaging 44 during all of last year. The index stands below a July 2023 high of 56 and a November 2020 peak of 90.
The average rate on a 30-year fixed rate mortgage eased to 6.89% last week compared to 6.95% in the prior week, down from a high of 7.79% in the last week of October, according to Freddie Mac.
The single-family sales measure declined 2.1% (-24.2% y/y) to 47 this month from 48 in June. It was the lowest reading since December. The prospective sales index in six months rose 2.1% (-18.6% y/y) to 48 from 47 in June. The traffic of prospective buyers’ index eased 3.6% (-32.5% y/y) to 27 in July from 28 in July.
Housing performance across the country was mixed in July. In the Northeast, the index fell 24.2% (-21.7% y/y) to 47 from 62. The index for the Midwest declined 2.5% (-15.2% y/y) to 39 from 40 in June. In the South, the index held steady at 43 (-25.9% y/y), below the high of 90 in November 2020. The index in the West fell 2.6% (-31.5% y/y) to 37 from 38 in June. The index hit a low of 28 in November.
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. The regional indexes run back to December 2004.
These data are included in Haver's SURVEYS 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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