US: Housing Market Index

Thu Mar 15 09:00:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
Housing Market Index 72 70 to 73 70 72 71

Home builders remain extremely optimistic but just a little less so in March, at an index score of 70 which is at Econoday's low estimate. The present sales component held steady at 77 though future sales slipped 2 points to 78 with traffic, which has been the swing component in recent months, down 3 points but still over 50 at a constructive 51. Composite data show all regions over 50 led by the West at 78 with the Northeast the lowest but still very respectable at 56. Today's data point to continued though perhaps to easing strength for the new home market, which are the expectations for tomorrow's housing starts and permits report.

Market Consensus Before Announcement
Home-builder confidence has been extremely strong with improvement in customer traffic an ongoing highlight. Assessments of current and future sales have been robust and have offered useful indications of gains for new home sales and permits. Econoday's March consensus calls for steady strength, at 72 for the housing market index which would be unchanged from February.

The National Association of Home Builders produces a housing market index based on a survey in which respondents from this organization are asked to rate the general economy and housing market conditions. The housing market index is a weighted average of separate diffusion indexes: present sales of new homes, sales of new homes expected in the next six months, and traffic of prospective buyers in new homes.

This report provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the housing market index, investors can gain specific investment ideas as well as broad guidance for managing a portfolio. Whether the housing market index reflects new home sales or home resales, once a home is sold, it generates revenues for the realtor and the builder. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic "ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month. Since the economic backdrop is the most pervasive influence on financial markets, home sales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.