The HMI is derived from a monthly survey that the NAHB has been conducting for 21 years, and gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good, rather than poor.
"The HMI is down from its most recent cyclical high of 72 in June of last year, and reflects growing builder uncertainly on the heels of reduced sales and increased cancellations related to eroding affordability, as well as an ongoing withdrawal of investors/speculators from the marketplace," said NAHB Chief Economist David Seiders.
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