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.

RELATED TERMS
  1. Repeat-Sales Method

    A way of calculating changes in the sales price of the same piece ...
  2. Indicator

    Indicators are statistics used to measure current conditions ...
  3. Rolling Option

    A contract that offers a buyer the right to purchase something ...
  4. New Home Sales

    An economic indicator that measures sales of newly built homes. ...
  5. Construction Loan

    A short-term loan used to finance the building of a home or another ...
  6. Foreclosure Prevention Act of 2 ...

    A housing act that is designed to help families keep homes that ...
Related Articles
  1. Personal Finance

    Why Building a House Is So Expensive Now

    Building a house can be very costly, so it’s best to understand all the factors that go into the equation before proceeding. Here’s what you need to know.
  2. Personal Finance

    Real Estate Indicators For Prospective Homebuyers

    If you want to buy a home but you’re holding out until market conditions show signs of improvement, housing indicators can help point the way.
  3. Investing

    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. Personal Finance

    Buying A Home: New Or Previously Owned?

    Brand-new homes have distinct advantages - and drawbacks. Find out what you need to know to make an informed decision.
  5. Retirement

    Economic Indicators: Existing Home Sales

    By Ryan Barnes Release Date: Fourth week of the month Release Time: 8:30am Eastern Standard Time Coverage: Previous month's ...
  6. Personal Finance

    The Best Day and Month to List Your Home

    Want to make a quicker sale? Get your house on the market this spring and pick the perfect day of the week to attract buyers.
  7. ETFs & Mutual Funds

    The Best ETFs to Play 2015's Housing Rebound

    Housing starts will likely rise about 20% this year, reviving the recovery. Stocks and ETFs have already begun to move.
  8. Personal Finance

    5 Mistakes to Avoid When Buying a New Home

    Learn about home ownership and some of the pitfalls a potential homebuyer faces. Understand five specific mistakes all homebuyers should avoid.
  9. Personal Finance

    Can I Afford a House in 2016?

    Start the homebuying process in 2016 before mortgage rates increase. More sellers are expected to list their homes, resulting in less competition for buyers.
  10. ETFs & Mutual Funds

    Lennar Cautiously Optimistic About 2012

    2012 could finally be the beginning of a slow but much needed recovery in housing.
RELATED FAQS
  1. What's the difference between housing starts and building permits?

    Both housing starts and building permits are economic indicators used to assess the health of the housing market, but their ... Read Answer >>
  2. Will I pay capital gains tax on the profits from the sale of my home?

    I am single and have lived in my house for 30 years. Does it make a difference if I rent or buy after selling the house? ... Read Answer >>
  3. Is it better to live in a state with a high tax base but low housing costs or a state ...

    My husband and I recently retired. We have lived in Montana for the past 15 years and want to retire to a warmer climate. ... Read Answer >>
  4. What are my risks of buying a house?

    I am 21, free of any kind of debt, and have saved up 120k for a down payment. I will still have some emergency fund after ... Read Answer >>
  5. Will we need to pay capital gains tax on our home that we owned for less than a year?

    We are in Texas. We bought a house 10 months ago with a sales price of $255K. We put a down payment of $75K on it. We ... Read Answer >>
  6. Which has performed better historically, the stock market or real estate?

    Find out why stocks have historically performed better than real estate in U.S. history, why this makes sense, and why the ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center