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What does today’s housing market have in common with May 2020 and August 2012?
The answer is a lackluster Housing Market Index of 37.
The HMI’s October reading of 37 was five points higher than September’s — a welcome boost from the previous four months of persistent readings in the low 30s. Still, the index is down six points annually, according to the data released earlier this month.
The long-running monthly index, published by the National Association of Home Builders (NAHB) and Wells Fargo, indicates how much confidence builders have in the single-family housing market as measured on a scale of zero to 100. Anything below 50 means most builders have a glass-half-empty outlook.
And that’s been the case for most of the past three years. Ever since the HMI’s epic 52-point tumble in 2022, the index has been stuck in a yo-yo pattern, dipping into the low 30s then soaring into the mid-50s before turning right back around.
Robert Dietz, chief economist at NAHB, described the five-point gain in a statement as a “positive signal for 2026” and added that he expects single-family housing starts to pick up next year.
But formidable challenges remain, NAHB Chairman Buddy Hughes said.
“Most home buyers are still on the sidelines, waiting for mortgage rates to move lower,” Hughes said in a statement.
Builder confidence today is commensurate with two recent historic flashpoints: the sharp downturn amid the onset of Covid-19 and the long recovery from the Great Financial Crisis before that.
Because of its longevity, the HMI tends to mirror market cycles. Its peaks and valleys track closely with every major downturn dating back to its creation in 1985.
The index is updated monthly according to the results of a national survey covering three topics: current demand for new single-family homes, anticipated demand over the next six months and interest level in terms of prospective buyer traffic.
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