MACRO MONDAY 21~NAHB Housing Market Index
Updated
MACRO MONDAY 21
NAHB Housing Market Index
The NAHB Housing Market Index (HMI) is compiled from a monthly survey issued by the National Association of Home Builders (NAHB) to U.S. builders in order to measure the current and forward looking sentiment for single-family homes being built or with the prospect of being built in the U.S.
In the survey builders rate their current single-family sales, sales prospects over the next six months, and the traffic of prospective buyers.
The NAHB Builders consists of more than more than 700 state and local associations with 140,000 members. According to the NAHB these builders account for some 80% of the new homes built in the U.S.
Correlation with U.S. Housing Starts
The HMI displays a close correlation with “U.S. Housing Starts”. U.S Housing starts are a broader measure of new residential construction for privately owned homes which includes multi-family housing (units & apartment complexes). U.S. Housing Starts is supplied monthly by the U.S. Census Bureau from surveys conducted and is considered a key economic indicator of the overall housing sector.
The release of U.S. Housing Starts is the day after the HMI, so the HMI gives us a day head start on the 11thbusiness day of each month (16th Nov), with Housing Starts released on the 12th business day (17th Nov).
The correlation between the HMI and the U.S. Housing Starts:
The NAHB release on Thurs 16thNov (11th Business Day) came in at 34
▫️ HMI readings above 50 reflect a generally favorable market view and outlook in the housing sector whilst a reading below 50 indicates weakness in the housing sector.
▫️ Since July 2023 the HMI has fallen from 56 down to 34.
▫️ The HMI registered an all-time high reading in November 2020 at 90 and since then has made a series of lower highs over 32 months. These lower highs combined with a reading below 50 do not bode well on the recession front as you can see from the below chart (red arrows).
Similar to recent months, from May – Aug 1989 the HMI peaked its head above the 50 level for these four summer months before tanking down to 20. From May – Aug 2023 the HMI briefly rose above the 50 level in similar fashion and appears to now be reducing at a rapid rate. An interesting level to watch will be the diagonal support line at approx. 31 (dashed line). If held it would be a higher low and could indicate a pause in the decline. A level to keep an eye on because if lost it means we have consistently made lower lows and lower highs. Not a good look at all and we would be eyeing the 20 level in such a scenario.
US Housing Starts
▫️ US Housing Starts release on Friday 17th Nov (12th Business Day) which provides for Octobers figures came in higher than expected at 1,372K vs the 1,350K estimate. Building Permits came in higher than expected at 1,487K vs the 1,450K estimate.
▫️ Given that the HMI is in less than favorable territory at 34 (HMI only accounts for single family homes), the higher than expected US Housing Starts could be an indication that larger multi-family housing (units and apartments) are being built at a greater rate than single-family houses. In any event US Housing Starts has been in decline since April 2022
https://www.tradingview.com/x/gItKRnXZ/
In summary the charts suggest the long term trend for both the NAHB and US Housing Starts are in decline with multi-unit properties (Apartments) being more rapidly built in recent months than individual homes.
We will keep an eye on the these metrics going forward and are now aware we can get a days advance indication from NAHB ahead of US Housing Starts being released.
PUKA
NAHB Housing Market Index
The NAHB Housing Market Index (HMI) is compiled from a monthly survey issued by the National Association of Home Builders (NAHB) to U.S. builders in order to measure the current and forward looking sentiment for single-family homes being built or with the prospect of being built in the U.S.
In the survey builders rate their current single-family sales, sales prospects over the next six months, and the traffic of prospective buyers.
The NAHB Builders consists of more than more than 700 state and local associations with 140,000 members. According to the NAHB these builders account for some 80% of the new homes built in the U.S.
Correlation with U.S. Housing Starts
The HMI displays a close correlation with “U.S. Housing Starts”. U.S Housing starts are a broader measure of new residential construction for privately owned homes which includes multi-family housing (units & apartment complexes). U.S. Housing Starts is supplied monthly by the U.S. Census Bureau from surveys conducted and is considered a key economic indicator of the overall housing sector.
The release of U.S. Housing Starts is the day after the HMI, so the HMI gives us a day head start on the 11thbusiness day of each month (16th Nov), with Housing Starts released on the 12th business day (17th Nov).
The correlation between the HMI and the U.S. Housing Starts:
The NAHB release on Thurs 16thNov (11th Business Day) came in at 34
▫️ HMI readings above 50 reflect a generally favorable market view and outlook in the housing sector whilst a reading below 50 indicates weakness in the housing sector.
▫️ Since July 2023 the HMI has fallen from 56 down to 34.
▫️ The HMI registered an all-time high reading in November 2020 at 90 and since then has made a series of lower highs over 32 months. These lower highs combined with a reading below 50 do not bode well on the recession front as you can see from the below chart (red arrows).
Similar to recent months, from May – Aug 1989 the HMI peaked its head above the 50 level for these four summer months before tanking down to 20. From May – Aug 2023 the HMI briefly rose above the 50 level in similar fashion and appears to now be reducing at a rapid rate. An interesting level to watch will be the diagonal support line at approx. 31 (dashed line). If held it would be a higher low and could indicate a pause in the decline. A level to keep an eye on because if lost it means we have consistently made lower lows and lower highs. Not a good look at all and we would be eyeing the 20 level in such a scenario.
US Housing Starts
▫️ US Housing Starts release on Friday 17th Nov (12th Business Day) which provides for Octobers figures came in higher than expected at 1,372K vs the 1,350K estimate. Building Permits came in higher than expected at 1,487K vs the 1,450K estimate.
▫️ Given that the HMI is in less than favorable territory at 34 (HMI only accounts for single family homes), the higher than expected US Housing Starts could be an indication that larger multi-family housing (units and apartments) are being built at a greater rate than single-family houses. In any event US Housing Starts has been in decline since April 2022
https://www.tradingview.com/x/gItKRnXZ/
In summary the charts suggest the long term trend for both the NAHB and US Housing Starts are in decline with multi-unit properties (Apartments) being more rapidly built in recent months than individual homes.
We will keep an eye on the these metrics going forward and are now aware we can get a days advance indication from NAHB ahead of US Housing Starts being released.
PUKA
Note
NAHB Housing Market Index Release 
USHMIRep: 44 ✅ Higher Than Expected ✅
Exp: 39
Prev: 37
LEVEL TO WATCH
Above 50 means favorable conditions in the housing sector and below 50 means less favorable
(red line on chart is the 50 level).
What's the NAHB data based on?
The NAHB Housing Market Index is based of soft data from surveys of builders that rate their current single-family sales, sales prospects over the next six months, and the traffic of prospective buyers.
CHART TREND
The NAHB made a high of 90 in Nov 2020 and has since fell to a low of 31 in Dec 2022 (the bottom). It then rose from 31 to 56 in July 2023 before rolling over and falling to 34 (a surprise to the downside at the time with 40 expected). We have now recovered back up to 44 which is positive however we are still congealing below the 50 level which is not ideal.
I was concerned about losing the dashed diagonal support line and dropping further down, instead we oscillated back up towards the 50 level which is short term positive.
Also on a positive note, we now have three higher lows, lets hope we don't get a 3rd lower high though.
NOT TO BE USED IN ISOLATION
This chart can abruptly rise above the 50 level and drop below it again just as fast. Its not the most reliable chart as it can rapidly change direction. We should consider it in conjunction with some other charts like such as
1. U.S. Housing Starts - close correlation to NAHB
(Ticker:
USHST)2. U.S. Existing Home Sales
(Ticker:
EXHOSLUSM495S) 👀🥱3. U.S. New Home Sales - AKA New Residential
(Ticker: )
The latter two we covered earlier this week
SEE BELOW 👇🏻👇🏻👇🏻👇🏻👇🏻
PUKA
Note
NAHB Housing Market Index (Feb)Rep: 48 ✅Higher Than Expected ✅
Exp: 46
Prev: 44 (no revision)
A major improvement bouncing from a less favourable reading of 34 in Nov 2023 to 48 presently.
Reading the chart
> 50 Favorable home builder conditions
< 50 Less Favorable home builder conditions
Note
PRESS PLAY ON THE CHART TO SEE THE UPDATED RELEASESNAHB Housing Market Index (Mar)
Rep: 51 ✅Higher Than Expected ✅
Exp: 48
Prev: 48 (no revision)
A major improvement bouncing from less favorable conditions at 34 (Nov 2023) to favorable conditions at 51 presently.
A good reading today with current and future conditions for single family home builds peaking into favorable territory (just above 50 level).
This is the strongest confidence in 8 months as the lack of existing inventory continues to drive single home buyers to new home construction
Reading the chart
> 50 Favorable home builder conditions
< 50 Less Favorable home builder conditions
What is the NAHB
The NAHB Housing Market Index (HMI) is compiled from a monthly survey issued by the National Association of Home Builders (NAHB) to U.S. builders in order to measure the current and forward looking sentiment for single-family homes being built or with the prospect of being built in the U.S.
In the survey builders rate their current single-family sales, sales prospects over the next six months, and the traffic of prospective buyers.
The NAHB HMI displays a close correlation with “U.S. Housing Starts” which can be reviewed in combination with this chart.
PUKA
Note
This came in yesterday - Press play on the chart to see the updated readingNAHB Housing Market Index (Apr)
Rep: 51 ✅As Expected ✅
Exp: 51
Prev: 51 (no revision)
The NAHB has had a major improvement bouncing from less favorable conditions at 34 (Nov 2023) to favorable conditions at 51 in March 2024. April held the line coming in at 51.
The current and future conditions for single family home builds is now marginally in favorable territory (just above 50 level).
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