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NAHB Housing Market Index
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|
 |
| MOST RECENT
STATISTIC: |
13 |
| Grade: |
F |
| PERIOD COVERED: |
August 2010 |
| Date Released: |
08/16/10 |
| Next Released: |
09/20/10 |
|
|
|
08/10 |
07/10 |
06/10 |
05/10 |
08/09 |
|
| Index |
13 |
14 |
16 |
22 |
18 |
| SF sales :present |
14 |
15 |
17 |
23 |
16 |
| Next 6 months |
18 |
21 |
22 |
27 |
30 |
| Shopper Traffic |
10 |
10 |
13 |
16 |
16 |
|
| p-preliminary;
r-revised
Source:
National
Association of Home Builders |
Analysis
for the Housing Market
By:Ken Lee
Despite record-low mortgage rates, builder confidence declined again in August due to expectations for weaker economic growth and weak employment trends which will continue to pressure housing activity going forward. The National Association of Homebuilders' housing market index declined one point from the previous month to a reading of 13 in August. The housing market index had reached its highest level in May since July 2007 but has now declined for three consecutive months to reach its lowest levels since March 2009.
Two out of the three component indexes also declined in August while one remained stable. The index for present conditions in single-family home sales declined one point from the previous month to a reading of 14. The index for single-family home sales in the next 6 months dropped three points to a reading of 18. The index measuring traffic of prospective buyers remained unchanged from July levels at a reading of 10.
Three out of the four regions across the country posted monthly declines in home builder confidence while one remained unchanged. The Northeast region posted the largest monthly drop, falling six points from July levels to a reading of 18. The housing market index for both the South and West regions eased one point from the previous month to readings of 13 and 8, respectively. The index for the Midwest remained unchanged from the previous month at a reading of 15.
Definitions and Importance for the Housing Market
By:Eric Alanis
The housing market index (HMI) is from the National Association of Homebuilders (NAHB), and is a composite of several monthly surveys of builders. Homebuilders are asked to rate as "good", "fair", or "poor" their current sales of single-family homes and their expectations of sales for the next six months. Also rated is the traffic of prospective buyers, ranging from "very low" to "very high".
Scores for each component are used to calculate a seasonally adjusted overall index. If all respondents, numbering approximately 1,000 builders, answer "Good", the index is 100. Conversely, if all respondents answer "Poor", the index is 0. If an equal number of respondents answer "Good" and "Poor", the index is 50. Therefore, any number over 50 indicates that there are more builders who consider sales conditions to be good than builders who view sales conditions as poor.
The housing market index is a good indicator of market conditions from the perspective of builders, and has shown to correlate with current and future housing starts. As an indicator of home building activity in the near future, the index tracks the "pulse" of what homebuilders perceive about the housing market. If they are satisfied with home buyer traffic and have positive expectations of the housing market, building activity will continue at a rate to meet the pace of the marketplace. On the other hand, if builders' expectations decrease along with their satisfaction with homebuyer traffic, they may scale back production schedules to match an anticipated slow-down in the market place and reduced demand.
For more information on the Housing Market Index, go to: http://www.nahb.com
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