US August NAHB housing market index rises to 35, beating expectations of 33
Key Takeaways
- •The NAHB housing market index climbed to 35 in August, beating the consensus forecast of 33 and rising from July's 34.
- •All three index components remained below the 50 threshold, with current single-family sales at 39, six-month sales expectations at 43, and prospective buyer traffic at 23.
- •Prospective buyer traffic, the demand-side component, remained the weakest reading by a wide margin.
- •The data release coincided with US 30-year Treasury yields hitting a fresh cycle high, a backdrop the report said would not help the housing market.
- •The report characterized the overall level of the readings as being in a deep recession, with government housing starts and new-home sales the next data points to watch.
The National Association of Home Builders' (NAHB) August housing market index came in at 35, ahead of the 33 expected by economists and up from July's reading of 34.
Also known as the NAHB/Wells Fargo Housing Market Index, the gauge is published monthly and is based on a survey of US homebuilders, who are asked to rate current single-family home sales, their expectations for sales over the next six months, and prospective buyer traffic. Readings above 50 indicate that more builders view conditions as good than poor. The index is among the earliest monthly reads on the US housing sector, arriving ahead of government data such as housing starts and new-home sales, and it is widely watched as a leading indicator of single-family construction activity, which feeds into residential investment, a component of US GDP.
August's component readings:
- Current single-family home sales: 39, up from 37 in July
- Expected home sales over the next six months: 43, unchanged from 43 in July
- Prospective buyers traffic: 23, unchanged from 23 in July
All three components sit below the 50 threshold, meaning more builders still rate each aspect of the market as poor than good, with prospective buyer traffic, the demand-side measure, the weakest by a wide margin.
The release coincided with US 30-year Treasury yields hitting a fresh cycle high, a backdrop the report said would not help the housing market. Long-term Treasury yields are a key reference point for US mortgage pricing, which is why moves of this kind are tracked closely for their implications for housing affordability. The report also noted that the broader economy continues to tick along, suggesting consumers may eventually get used to mortgage rates above 6%, which are not expected to go away any time soon.
Despite the improvement this month, the report described the overall level of these readings as being in a deep recession, calling housing a part of the economy that is in terrible shape. The next datapoints to watch are the government's housing starts and new-home sales releases, which will show whether the modest uptick in builder sentiment carries through to construction and sales activity.
Source: ForexLive
