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Why American Homebuilders Are Confident about Industry

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About the NAHB Housing Market Index

The National Association of Home Builders (or NAHB) consists of 700 state and local associations of home builders (REM), real estate sales and marketing professionals, and remodelers. The Housing Market Index (or HMI) is based on a monthly survey of its members. The survey mostly relates to builders in the single-family housing market (ITB) and asks its participants to rate the current conditions and expected conditions in the next six months as “good,” “fair,” or “poor.” The report also rates traffic from prospective buyers as “high to very high,” “average,” or “low to very low” for new homes.

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NAHB HMI reading for February

The housing market index ranges between zero and 100, as it is a diffusion index. The NAHB survey consists of three different surveys, and the final HMI reading is a weighted average of these three surveys.

February’s HMI reading was reported at 72, unchanged from the January reading and two points below the 18-year peak reported in December. The component tracking current sales conditions dropped by one point to 78, the component measuring buyer traffic remained unchanged at 54, and the component charting sales expectations in the next six months increased by two points to 80.

Outlook from the NAHB

NAHB chair Randy Noel said, “Builders (PKB) are excited about the pro-business political climate that will strengthen the housing market and support overall economic growth.” The chief economist of the NAHB, Robert Diaz, said that consumer demand for housing could grow in the months ahead, aided by improving employment conditions and decreased supply of existing homes on the market.

Homebuilders remain confident that the housing (XHB) sector is poised for growth, and demand could increase in the future. In the rest of this series, we’ll analyze the February economic data from the housing (PAVE) market and analyze the health of the sector.

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