US July NAHB Index Declines To 8-Month Low, Cost Pressures Continue

The National Association of Home Builders (NAHB) index declined to 64 for July from a revised 66 the previous month. The reading was slightly below consensus estimates of a reading of 67 for the month. This was the lowest reading since November 2016 as all three main components lost ground on the month.

The current sales index declined to 70 for the month from 72 while index for sales expectations in six months’ time rose retreated to 73 from 75 previously. The buyer traffic index edged lower to 48 on the month from 49 previously.

On a three-month moving average basis, there were slight gains for the Northeast with small declines in the other regions.

The current sales index has been at or above 70 for the last 8 months which suggests firm underlying demand, but there have been increased pressures on builders from rising material costs which is also continuing to have an impact on affordability.

There has been further evidence that shortages of labour and building plots is continuing to restrict activity.

Although confidence has been generally firm, actual housing data has been relatively disappointing over the past few months with a lack of momentum in housing starts and building permits. The NAHB data suggests that this trend is liable to continue in the short term due to supply-side issues.

The dollar remained on the defensive after the data with EUR/USD at fresh 14-month highs around 1.1580 while USD/JPY traded just below 112.00 and Treasuries extended gains with 10-year yields down to 2.27%.

Tim is a contributing author to He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.