Housing Index Falls for December

Reflecting builders’ increased concern about the market for single-family homes, the National Assn. of Home Builders’ Housing Market Index (HMI) fell eight points to 57 in December.

“Given the recent decline in consumer confidence, along with stock market volatility and rising energy costs, home builders appeared less confident about the market for new homes, despite declining mortgage interest rates,” said Robert Mitchell, NAHB president and a home builder from Rockville, Md.

The eight-point decline brings the housing index back to its mid-year level, and the index is now 27% below its peak at the end of 1998.

The HMI is derived from a monthly survey of builders that NAHB has been conducting for almost 20 years.

Home builders are asked to rate current sales of single-family homes and sales expectations for the next six months as “good,” “fair” or “poor.” They are also asked to rate traffic of prospective buyers as either “high to very high,” “average” or “low to very low.”

Scores for responses to each component are used to calculate a seasonally adjusted overall index, where any number over 50 indicates that more builders view sales conditions as good than poor.

The index for current sales of new single-family homes fell eight points to 63 in December, while the index for expected sales in the next six months declined nine points to 63. The index gauging traffic of prospective buyers fell four points to 42.

The NAHB is a Washington- based trade association representing more than 200,000 member firms and professionals.