The NAHB/Wells Fargo Housing Market Index (HMI) is designed to gauge and track the pulse of the single-family housing market. The HMI is based on a monthly survey of single-family builders who are asked to rate three specific conditions of the housing market:
- Present sales of new single-family homes
- Expected sales of single-family homes for the next six months
- Traffic of prospective buyers of new single-family homes
Each month, the HMI depicts overall builder sentiment toward housing market conditions on a scale ranging between 0 and 100. A higher reading (>50) is an indication that the majority of builders feel confident about the current and near-term outlook for housing. Lower readings signify less optimism among builders.
Latest Data of the Housing Market Index (HMI)
Methodology of the HMI
The HMI is a weighted average of the three components included in the monthly builder survey: present sales of new single-family homes, expected sales of single-family homes for the next six months, traffic of prospective buyers of new single-family homes. The weights are:
- .5920 for Present Sales
- .1358 for Expected Sales
- .2722 for Buyer Traffic
A panel of builders rates the first two on a scale of “good,” “fair” or “poor” and the last on a scale of “high to very high,” “average” or “low to very low”. An index is calculated for each component by applying the formula “(good – poor + 100)/2” or, for Traffic, “(high/very high…
