NAHB Housing Market Index

The NAHB/Wells Fargo Housing Market Index (HMI) is a monthly sentiment index, meaning a gauge of builder opinions, for new single-family homes. Published by the National Association of Home Builders (NAHB) with Wells Fargo, it comes from a monthly survey of single-family builder members. The panel is grouped by region and builder size and is refreshed on a regular cycle.

It covers only new single-family homes, not multifamily units, existing-home sales, starts, permits, sales counts, or prices. It gauges perceptions, so it can move before building activity such as starts. Scores run 0 to 100, with 50 as the neutral line where optimists equal pessimists. Above 50 means more builders view conditions as good than poor, while below 50 signals weaker optimism.

The index appears every month in the middle of the month in the morning Eastern Time, with one reading for that calendar month. Each reading carries the name of its own month. Full national, component, and regional history tables appear on the HMI page.

Each release prints the headline HMI with its 3 component indices for present sales, expected sales, and buyer traffic. It also gives 3-month moving averages, meaning rolling averages over 3 months, for 4 regions, namely the Northeast, Midwest, South, and West. It also reports findings from special questions on pricing tactics such as price cuts and sales incentives, without adding a transactions count. No revision policy is stated in publisher texts.

A set of 3 survey components drives the headline, each with a fixed weight.

• Present sales of new single-family homes, weight 0.5920: captures current selling conditions rated good, fair, or poor. Stronger selling conditions lift this component, while softer conditions lower it.

• Expected sales of single-family homes for the next 6 months, weight 0.1358: captures near-term sales outlook rated good, fair, or poor. A brighter outlook lifts this component, while a weaker outlook lowers it.

• Traffic of prospective buyers of new single-family homes: captures buyer foot traffic rated high to very high, average, or low to very low. Its weight is 0.2722. Stronger foot traffic lifts this component, while thinner traffic lowers it.

Readings above 50 mean more builders see conditions as good than poor and signal broad confidence. Readings below 50 mean more builders see conditions as poor than good and signal limited optimism. A reading of 50 means optimists equal pessimists for good versus poor, and the same balance holds for high versus low traffic. No other cutoffs are stated, with 0 only when every answer is poor and 100 only when every answer is good.

Diffusion index, meaning a score built from response shares, comes first. For present and expected sales, use (good minus poor plus 100) divided by 2. For buyer traffic, use (high or very high minus low or very low plus 100) divided by 2. Answers of fair or average affect only the denominator.

Seasonal adjustment, meaning correction for normal seasonal swings, comes next. Component scores feed a seasonally adjusted index. Publisher texts do not spell out the procedure or its order relative to weighting.

Weighted average, meaning components combined by fixed weights, is the final step. HMI equals 0.5920 times present sales plus 0.1358 times expected sales plus 0.2722 times buyer traffic. The result lies on a scale from 0 to 100.

The key point is simple. The HMI does not count homes sold or built and does not measure prices. It gauges builder perceptions, so 50 means optimists equal pessimists, not a healthy market. It can lead starts because sentiment moves before building.