The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.

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December 18, 2006

Still Bad... But Not Getting Worse

In case you are unfamiliar with the NAHB-Wells Fargo Housing Market Index -- the latest installment of which being released today --  you can find a very nice description at the National Association of Homebuilders website.  A few highlights:

The Housing Market Index (HMI) is based on a monthly survey of NAHB members designed to take the pulse of the housing industry, especially the single-family industry.  The survey asks respondents to rate general economic and housing market conditions.

    • The HMI is a weighted average of separate diffusion indices, calculated for three key single family series in the survey: Present Sales of New Homes, Sale of New Homes Expected in the Next 6 Months and Traffic of Prospective Buyers in New Homes...
    • This formula puts each diffusion index on a convenient scale.  If all respondents answer “Good/High” then the index is 100.  If all respondents answer “Poor/Low” then the index is 0.  If equal numbers of respondents answer “Good/High” and “Poor/Low” then the index is 50.

If, like me, you live in the Midwest, your neighborhood breached the 50 threshold in the middle of 2005.  The country as a whole followed suit, but not until May of this year:




Note that the index values for both the Midwest and Northeast, having entered below-50 territory before the South and West, are actually improving (the East region for several months now).  The West, the last region to register a more-bad-than-good index value -- and clearly the hottest of the hot markets according to the HMI -- in fact remains the only part of the country where things are continuing to deteriorate.    

Given the low values of these index numbers this may be a weak reed to clutch, but doesn't that look like the very picture of bottoming out?

(Thanks to Brent Meyer for a big assist on this one.)

December 18, 2006 in Data Releases , Housing | Permalink


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Really sounds more retrospective than prospective, or at most current. Seeing how it did in the early 00s or late 80s and early 90s would tell us whether it is predictive or only hopeful.

Posted by: Lord | December 19, 2006 at 01:50 PM

One might have seen the series bottoming out in early 2005 ... Maybe?

Posted by: SamK | December 20, 2006 at 09:24 AM

Why do I have trouble believing that the Mid-West is leading the housing resurgence? The South and NE are already following suit, but I just can't get myself to nod along in step with this NAHB trail of Promising Lands Ahead.
Could be I'm just not familiar enough with the index. It's robustness.

"The survey asks respondents to rate general economic and housing market conditions."

[So people, how were you feeling mid Nov after the election? More than most might have been relieved even if their damn house burned down.]
Who are these masked respondents, Tonto? Prospective buyers who were willing to talk...such a life, no? (Maybe short-sellers...making sure this time.) How does the NAHB use this data (--obviously not for controlling inventory)?
It looks contemporaneous all those regions on one sheet using the same calender, but is it? Could the hot money in San Diego have moved to Atlanta, then to Phoenix and now be restin in Boise?
I know the pretty picture is hiding the dynamics, but can I figure it out? no I B bamboozled by the graphics.

Posted by: calmo | December 21, 2006 at 06:20 PM

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