What Is the NAHB/Wells Fargo Housing Market Index🌟 (HMI)?

The NAHB/Wells Fargo Housing Market Index (HMI) is a monthly sentiment survey of members of the National Association of Home Builders (NAHB). The index measures sentiment among builders of U.S. single-family homes, and is a widely watched gauge of the U.S. housiꦆng sector. Since housing represents is a large capital investment and spurs additional consumer spending on appliances and furnishings, housing market indices help to monitor the overall health of the economy.

꧅ Understanding the NAHB👍/Wells Fargo Housing Market Index (HMI)

The National Association of Home Builders is a federation of more than 700 state and local associations with 140,000 members. About one-third are home builders and remodelers, and the rest professionals from related fields such as mortgage finance and building materials supply. NAHB builders account for some 80% of the new homes built in the U.S.

Since 1985, the HMI has been based on a monthly survey completed by NAHB builders, which was generating some 400 responses as of 2007. In completing the survey, builders rate housing market condi💙tions and outlook based 🍨on their recent experience.

The HMI is a weighted average of three diffusion indexes, designed to range from 0 to 100. HMI readings🔯 above 50 reflect a generally favorable market view and outlook in the indus💯try.

HMI fell to a record low of 8 in January 2009, and set a record high of 90 in November 2020.

Calculating the Housing Market Index

The HMI is a weighted average 𒈔ofไ three component indices: current single-family sales, the outlook for sales over the next six months, and traffic of prospective buyers. Each month, participating builders rate current sales and the six-month outlook as good, fair, or poor and the buyer traffic as high to very high, average, or low to very low.

A diffusion index is calculated for each series by 🏅applying the formula (good - poor + 100) / 2 to the present and future sales serie💦s and (high/very high - low/very low + 100) / 2 to the prospective buyer traffic responses.

Each resulting index is then seasonally adjusted and weighted to generate the HMI. The weights are .5920 for present sales, .1358 for future sales, and .2722 for traffic. The weights were chosen based on historical data to maximize the 澳洲幸运5官方开奖结果体彩网:correlation between the HMI and 澳洲幸运5官方开奖结果体彩网:housing starts over the next six months.

The Housing Market Index as an Economi⭕c Indicator

The HMI displays a close correlation with U.S. single-family housing starts, which measure the number of privately-owned homes on which construction started in a given month. Housing starts are a key 澳洲幸运5官方开奖结果体彩网:economic indicator and the report is supplied monthly by the U.S. 澳洲幸运5官方开奖结果体彩网:Census Bureau.

As a gauge of home builder sentiment, the HMI provides valuable clues on the near-term direction of housing starts. The HMI is released at 10 a.m. EST typically on the 11th business day of the month, which i🗹s the day before the housing starts data are released by the Census Bureau.

The HMI has historically closely tracked housing starts and building permits. Its complete recovery from the depths of the 2008-2009 global financial crisis has outpaced the rebound in housing starts, however.