78
MARKET CONFIDENCE
INCREASES FOR AUGUST
e score for the Housing Market Index
rose this month along with the rankings for the
housing market's single family sales (current
and within the next six months). Despite this,
the ranking for traffic of prospective buyers
decreased again, according to the National
Association of Home Builders/Wells Fargo
Housing Market Index (HMI).
e total Housing Market Index rose two
points from 58 in July to 60 points in August
2016. e single family sales, both current and
for the next six months, rose 2 and 1 points in
August 2016 respectively from 63 and 66 to 65
and 67. e traffic of prospective buyers, on the
other hand, continued to decrease a point this
month from 45 in July to 44 in August.
Regionally, the Northeast and South saw
an increase while the Midwest saw a decrease
in index points from the previous month. e
West's index score stayed the same for this
month. e Northeast rose two points from 39
in July to 41 in August while the South saw an
even greater increase of four points with July's
score of 60 rising to 64 in August. As for the
Midwest, the index score dropped two points
from 57 to 55. e West remained consistent
with the same score of 69 from July to August.
e report states that the HMI is based on
a monthly survey of NAHB members designed
to take the pulse of the single-family housing
market. e survey asks respondents to rate
market conditions for the sale of new homes at
the present time and in the next six months as
well as the traffic of prospective buyers of new
homes.
e NAHB survey asks builders to rate
sales and sales expectations as "good," "fair"
or "poor" as well as rate traffic of prospective
buyers as "high to very high," "average" or "low
to very low". ese three component indexes
are calculated by first seasonally adjusting the
percentage of responses in the Good/High
and Poor/Low categories, then the formula
[(Good/High - Poor/Low +100) [2] is applied to
the seasonally adjusted numbers to produce an
index. is puts each index on a scale ranging
from 0 to 100. e three components are then
incorporated into the overall HMI, using
weights based on correlations with present and
future single-family housing starts.
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