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The Week Ahead: A Glimpse at the Health of the Market

Market Go Next BHThe rankings for the housing market’s single family sales (current and within the next six months) decreased for the month of July 2016 along with the ranking for traffic of prospective buyers, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

The single family sales, both current and for the next six months, fell 1 and 3 points in June 2016 respectively from 64 and 69 to 63 and 66. Likewise the traffic of prospective buyers decreased a point from 46 in June to 45.

The report states that the HMI is based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. The survey asks respondents to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes.

The NAHB survey asks builders to rate sales and sales expectations as “good,” “fair” or “poor” as well as rate traffic of prospective buyers as “high to very high,” “average” or “low to very low”. These three component indexes are calculated by first seasonally adjusting the percentage of responses in the Good/High and Poor/Low categories, then the formula [(Good/High - Poor/Low +100) [2] is applied to the seasonally adjusted numbers to produce an index. This puts each index on a scale ranging from 0 to 100.  The three components are then incorporated into the overall HMI, using weights based on correlations with present and future single-family housing starts.

The August HMI will be released Monday, August 15, 2016.

HUD/Census Bureau Housing Starts Report for July 2016: Tuesday, August 16, 8:30 a.m. EST

The June residential building activity report from HUD and the Census Bureau found that permits and starts were up over-the-month but down over-the-year, which is preventing housing supply from keeping up with demand.

Will this trend change for July and start to close the gap between supply and demand? The industry will find out on Tuesday, August 16, when July’s report is published.

Building permits for privately owned housing units in June were at a seasonally adjusted annual rate of 1.15 million, which was 1.5 percent higher than May's rate, but is 13.6 percent below June 2015. There were 1.19 million actual housing starts in June, nearly 5 percent above May, but still 2 percent below last June.

Ralph McLaughlin, chief economist at Trulia, cited zoning issues as a probable cause for the lagging permit numbers.

“While restrictive zoning regulation is often named as public enemy number one, our latest research suggests delays in permit approval better explains why new supply is abundant in some areas and stingy in others,” he said. “This is because zoning can be changed, while uncertainty over project approval cannot.”

This week's schedule:

Monday, August 15
NAHB/Wells Fargo Housing Market Index for August, 10 a.m EST

Tuesday, August 16
HUD/Census Bureau Housing Starts Report for July 2016, 8:30 a.m. EST

Wednesday, August 17
Federal Open Market Committee Meeting Minutes Published, 2 p.m. EST

About Author: Kendall Baer

Kendall Baer is a Baylor University graduate with a degree in news editorial journalism and a minor in marketing. She is fluent in both English and Italian, and studied abroad in Florence, Italy. Apart from her work as a journalist, she has also managed professional associations such as Association of Corporate Counsel, Commercial Real Estate Women, American Immigration Lawyers Association, and Project Management Institute for Association Management Consultants in Houston, Texas. Born and raised in Texas, Baer now works as the online editor for DS News.
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