NAHB/Wells Fargo Housing Market Index


DEFINITION of 'NAHB/Wells Fargo Housing Market Index'

An index based on a monthly survey of members belonging to the National Association of Home Builders (NAHB) that is designed to measure sentiment for the U.S. single-family housing market. The NAHB/Wells Fargo Housing Market Index (HMI) is a widely watched gauge of the outlook for the U.S. housing sector.

The survey on which the index is based asks the NAHB’s 140,000-plus members to rate market conditions for current new home sales and in the next six months, as well as prospective buyer traffic for new homes. The HMI is a weighted average of separate diffusion indexes for these three series. Its reading can range between 0 and 100; a reading over 50 indicates that more builders view sales conditions as good compared with those who view them as poor.

BREAKING DOWN 'NAHB/Wells Fargo Housing Market Index'

The HMI is calculated as follows: The two series for market conditions for current new home sales and in the next six months are rated on a scale of Good, Fair and Poor, while the buyer traffic series is rated on a scale of High/Very High, Average and Low/Very Low. A diffusion index is then calculated for each series by applying a formula, after which each resulting index is seasonally adjusted and weighted to generate the HMI.

The HMI is produced by the Economics arm of the NAHB, one-third of whose members are home builders and/or remodelers, with the others in closely related sectors such as building materials, housing finance and real estate sales. NAHB’s builder members annually construct about 80% of the new homes built in the U.S.

The HMI displays a close correlation with U.S. single-family housing starts, which refers to the start of construction on privately-owned homes. Housing starts data is a key indicator of how the U.S. economy is faring and is supplied monthly by the U.S. Census Bureau. As the HMI is a gauge of homebuyers’ intentions, it can provide valuable clues about the near-term direction of housing starts. The HMI is released monthly at 10am EST on the day before housing starts data is released by the Census Bureau, which is generally around mid-month.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Reverse Survivorship Bias

    The tendency for low performers to remain in the game, while ...
  3. PHLX Housing Sector Index - HGX

    An index that tracks approximately 20 companies that work directly ...
  4. Housing Starts

    The number of new residential construction projects that have ...
  5. Investment Real Estate

    Real estate that generates income or is otherwise intended for ...
  6. Housing Unit

    One of a house, apartment, mobile home, group of rooms or single ...
Related Articles
  1. Home & Auto

    Why Housing Market Bubbles Pop

    Home price appreciation is not assured. Can you withstand the volatility in this market?
  2. Economics

    How Interest Rates Affect The Housing Market

    Understand how rate changes can affect home prices, and learn how you can keep up.
  3. Investing Basics

    Understanding The Case-Shiller Housing Index

    This index is a widely-used and respected barometer of the U.S. housing market and the broader economy.
  4. Economics

    Why The Consumer Price Index Is Controversial

    Find out why economists are torn about how to calculate inflation.
  5. Forex Education

    Predict Inflation With The Producer Price Index

    Find out how the PPI can be used to gauge the overall health of the economy.
  6. Home & Auto

    Closing A Real Estate Deal In A Down Market

    We provide top tips on how to help sell your home in a rough market.
  7. Home & Auto

    4 Types Of Home Renovation: Which Ones Boost Value?

    You think your updated house looks great, but potential buyers may not feel the same way.
  8. Home & Auto

    Simple Ways To Invest In Real Estate

    Owning property isn't always easy, but there are plenty of perks. Find out how to buy in.
  9. Home & Auto

    Exploring Real Estate Investments

    Discover how owning properties can give you a roof over your head or a check in your pocket.
  10. Retirement

    Economic Indicators To Know

    The economy has a large impact on the market. Learn how to interpret the most important reports.
  1. Does an FHA loan require a down payment?

    Federal Housing Administration (FHA) loans require down payments, which can be as low as 3.5% of the total purchase price ... Read Full Answer >>
  2. Do FHA loans have closing costs?

    Because Federal Housing Administration (FHA) loans are provided by financial institutions, taking out an FHA loan entails ... Read Full Answer >>
  3. What economic indicators are important to consider when investing in the retail sector?

    The unemployment rate and Consumer Confidence Index (CCI) rank as two of the most important economic indicators to consider ... Read Full Answer >>
  4. What types of expenses are factored into autonomous consumption?

    Autonomous consumption is the level of consumption necessary to support everyday life in a zero-income scenario. Put another ... Read Full Answer >>
  5. What are some of the key shortcomings of how the U.S. unemployment rate is determined ...

    Each month, the Bureau of Labor Statistics (BLS), a division of the U.S. Department of Labor, announces the unemployment ... Read Full Answer >>
  6. While closely related, how do gross domestic product (GDP) and gross national income ...

    Gross domestic product, or GDP, and gross national income, or GNI, are the two most important economic indicators that measure ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  4. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  5. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
Trading Center