US: Housing Market Index

Tue May 15 09:00:00 CDT 2018

Consensus Consensus Range Actual Previous Revised
Housing Market Index 69 69 to 71 70 69 68

Sentiment among the nation's home builders is strong and moving higher this month, to an index level of 70 vs a downwardly revised 68 in April. May's index got a lift from present sales which rose 2 points to 76 while 6-month sales held unchanged at 77. Traffic is unchanged for a third month in a row at 51, a modest level reflecting a continued lack of first-time buyers. Regional composite data have the West out in front followed by the South and Midwest with the Northeast lagging but still growing. The new home market looks to be the continued center of strength for the housing sector. Watch tomorrow for housing starts and permits in data for April.

Market Consensus Before Announcement
Home-builder confidence has been leveling in contrast to new home sales and permits which are both accelerating. Econoday's consensus calls for no change in the housing market index, in what would match April's 69 which was a 5-month low.

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.