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Housing Market: US: Difference between revisions
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Also important to point out that is volumes that matter for real GDP accounting, not prices. Prices can matter indirectly through a wealth effect, but be a little skeptical about this. And that the sluggishness of price adjustments is what makes the volume cycle so extreme, and what makes housing so important in recessions. | Also important to point out that is volumes that matter for real GDP accounting, not prices. Prices can matter indirectly through a wealth effect, but be a little skeptical about this. And that the sluggishness of price adjustments is what makes the volume cycle so extreme, and what makes housing so important in recessions. | ||
== NAHB Index == | |||
'''Methodology''' | |||
The NAHB/Wells Fargo HMI is a weighted average of three separate component indices: Present Single-Family Sales, Single-Family Sales for the Next Six Months, and Traffic of Prospective Buyers. Each month, a panel of builders rates the first two on a scale of “good,” “fair” or “poor” and the last on a scale of “high to very high,” “average” or “low to very low”. An index is calculated for each series by applying the formula “(good – poor + 100)/2” or, for Traffic, “(high/very high – low/very low + 100)/2”. | |||
Each resulting index is first seasonally adjusted, then weighted to produce the HMI. The weights are .5920 for Present Sales, .1358 for Sales for the Next Six Months, and .2722 for Traffic. The weights were chosen to maximize the correlation with starts through the following six months. | |||
The HMI can range between 0 and 100. | |||
[[File:Screenshot 2023-08-29 141153.png|center|thumb|627x627px|https://tradingeconomics.com/united-states/nahb-housing-market-index]] | |||
=== July 2023 === | |||
After steadily rising for seven consecutive months, builder confidence retreated in August as rising mortgage rates nearing 7% (per Freddie Mac) and stubbornly high shelter inflation have further eroded housing affordability and put a damper on consumer demand. | |||
The August HMI survey also revealed that rising mortgage rates are causing more builders to use sales incentives to attract home buyers. '''After dropping steadily for four months (from 31% in March to 22% in July), the share of builders cutting prices to bolster sales rose again to 25% in August.''' The average decline for builders reducing prices remained at 6%. And the share of builders using incentives to bolster sales was 55% in August, higher than in July (52%) but still lower than in December 2022 (62%).<ref>https://www.nahb.org/news-and-economics/press-releases/2023/08/builder-confidence-falls-on-rising-mortgage-rates</ref> | |||
“Rising mortgage rates and high construction costs stemming from a dearth of construction workers, a lack of buildable lots and ongoing shortages of distribution transformers put a chill on builder sentiment in August,” said NAHB Chairman Alicia Huey, a custom home builder and developer from Birmingham, Ala. “But while this latest confidence reading is a reminder that housing affordability is an ongoing challenge, demand for new construction continues to be supported by a lack of resale inventory, as many home owners elect to stay put because they are locked in at a low mortgage rate.” | |||
{| class="wikitable" | |||
! colspan="3" rowspan="2" |(Seasonally Adjusted) | |||
! colspan="5" |2022 | |||
! colspan="8" |2023 | |||
|- | |||
!Aug. | |||
!Sep. | |||
!Oct. | |||
!Nov. | |||
!Dec. | |||
!Jan. | |||
!Feb. | |||
!Mar. | |||
!Apr. | |||
!May | |||
!Jun | |||
!Jul | |||
!Aug | |||
|- | |||
| colspan="3" |Housing Market Index | |||
|49 | |||
|46 | |||
|38 | |||
|33 | |||
|31 | |||
|35 | |||
|42 | |||
|44 | |||
|45 | |||
|50 | |||
|55 | |||
|56 | |||
|50 | |||
|- | |||
| colspan="3" |'''Housing Market Index Components''' | |||
| colspan="13" | | |||
|- | |||
| colspan="3" |Single Family Sales: Present | |||
|57 | |||
|54 | |||
|45 | |||
|39 | |||
|36 | |||
|40 | |||
|47 | |||
|49 | |||
|51 | |||
|56 | |||
|61 | |||
|62 | |||
|57 | |||
|- | |||
| colspan="3" |Single Family Sales: Next 6 Months | |||
|47 | |||
|46 | |||
|35 | |||
|31 | |||
|35 | |||
|37 | |||
|48 | |||
|47 | |||
|50 | |||
|56 | |||
|62 | |||
|59 | |||
|55 | |||
|- | |||
| colspan="3" |Traffic of Prospective Buyers | |||
|32 | |||
|31 | |||
|25 | |||
|20 | |||
|20 | |||
|23 | |||
|28 | |||
|31 | |||
|31 | |||
|33 | |||
|37 | |||
|40 | |||
|34 | |||
|} | |||
== Sales == | == Sales == | ||