Housing Market Index Bounces Back

Optimism among home builders, which has been easing slightly from very strong levels, bounced back strongly in October, to a composite headline of 68 which is 4 points above both August and Econoday's consensus. Strength is led by future sales, up 5 points to 78, with current sales at 75 for what is also a 5 point gain. Traffic, however, continues to remain below breakeven 50, at 48 for a 1 point gain but still reflecting lack of participation from first-time buyers.

Hurricane effects have not been prominent in this report though the South did show some weakness in September. For October, the South popped 4 points higher to a composite score of 69 which is next in strength only to the West which, though dipping 3 points, is at 76 in a reminder that this region is a key focus for home builders. The Midwest is also strong at 65 while the Northeast lags far back as always at 50.

Sales of new homes were very strong at the outset of the year but have faded since though housing permits have been coming alive in recent months. This report, much like other measurements of economic confidence, has been very solid this year and is pointing to a possible year-end uplift for new housing.

Recent History Of This Indicator:
Optimism among home builders eased noticeably in September though hurricane effects were hard to identify. Current sales dipped as did traffic which has been stubbornly weak through the whole expansion and reflecting lack of interest among first-time buyers. Forecasters see the housing market index holding unchanged at 64 in October.