NAHB Data Say the Downturn Is Over

posted on February 29th, 2012 filed under: Real Estate Market Data

The Housing Market Index (HMI) maintained by the National Association of Home Builders and Wells Fargo suggests the bottom is in and the downturn is over.

The HMI is a sentiment index.  It reflects a monthly survey of home builders that measures their opinions of current conditions and future expectations.  So even if lagging or concurrent price or sales data continue to struggle, home builders may become more optimistic about the future based on their inside insight.

A minor uptick in the HMI would not be noteworthy.  But the HMI has spiked over the last few months in a manner that previously has been associated with the end of a downturn (compare the recent spike to that in the early 1990s in the chart below).

NAHB Housing Market Index (HMI) -- Chart, Graph -- February 2012

Risks remain — especially the possibility of higher inflation and interest rates without corresponding wage gains.  But for now at least, the HMI is telling a different tale.

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posted by // This entry was posted on Wednesday, February 29th, 2012 at 12:46 pm and is filed under Real Estate Market Data. You can follow any responses to this entry through the RSS 2.0 feed.

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