Analyzing the NAHB Housing Market Index: Uncovering Long-Term Trends and What They Mean

Published | Written by Dan Price

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is an indispensable tool for assessing the housing market's health. It reveals builders’ sentiment concerning current sales, sales expectations, and buyer traffic. In this article, we’ll dive into the historical data, analyze the trends, and derive insights that might not be apparent at first glance.


Trend Analysis: Examining the HMI from 1985 to 2023 reveals cyclical trends. The index underwent significant troughs around 1991, 2008, and now again in 2021-2023. Notably, the current rebound in 2023 mirrors the strong recoveries observed in the years following the previous troughs.



The 2023 Rebound in Context: The latest data for June 2023 shows the HMI at 55, a sixth consecutive monthly increase, and the first time it has gone above 50 since July 2022. To fully appreciate this, we need to see it in the context of historical peaks and troughs. In 1991, the HMI hit a low of 20, and then steadily rose over the next few years. Similarly, in 2008-2009, we observed a trough with the index dipping down to 8 and 9, respectively. The years following 2009 saw a robust recovery, with the index eventually reaching an all-time high of 90 in November 2020. Now, looking at the recent trough in December 2022 with the HMI at 31, and the sharp recovery to 55 in June 2023, we see parallels to previous rebounds.


Beyond The Numbers: However, there’s more to the numbers. Note that prior recoveries took a longer duration to play out, while the current rebound appears more rapid. This is indicative of potentially high market responsiveness and agility amongst today’s builders. Additionally, an interesting observation is the increasing amplitude in the cyclical patterns. This suggests greater market volatility over the years and possibly indicates that the market is becoming more reactive to macroeconomic factors.


The NAHB Housing Market Index serves as a robust indicator of market trends. The current rebound is indicative of a potentially strong recovery, similar to previous cycles. However, with increasing amplitude in these cycles, it is essential for prospective buyers and investors to approach the market with an informed strategy. A historical perspective can offer invaluable insights into the possible trajectory and pacing of market developments. Staying attuned to the broader trends and underlying drivers will ensure well-informed and strategic decision-making.?

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