Housing Market Index Edges Higher

The housing market index edged 1 point higher in the August report as was expected to a 66 level that matches May as the best reading so far this year. In a welcome indication for new home sales, the present sales component in this report rose 2 points to 73 for the best score since October last year. The sales gains may well be from newcomers in the market as traffic rose 2 points to 50 which is also the best score since October. Future sales, the third component in the report, edged 1 point lower to 70.

The improvement in traffic may well reflect this month's drop in mortgage rates, a decline tied indirectly to last month's rate cut by the Federal Reserve and directly tied to demand in the financial markets for the safety of the bond market. Regionally, the West continues to be the most favorable region for home builders at a composite score of 75 followed by the South at 69. The Midwest is at 59 and the Northeast at 57.