The Housing Market Index (HMI) is a monthly survey of homebuilders designed to gauge the "pulse" of the single-family housing market. While this report is not "hard data" and is a sentiment reading, it is one of the earliest or "real-time" measures of activity in the housing market.
The HMI for March was released this morning and showed a reading of 62, one point shy of the expected reading of 63. A reading of 62 is flat month over month and well off the high of 74 in December of 2017.
When looking at any data series, we are primarily concerned with the trending direction or rate of change in the data series.
Many housing indices have recovered slightly from the late 2018 plunge in housing, but the trend still remains lower over the past two years.
If we look at the index of prospective buyers in order to attempt to see out a few months, the reading for March ticked lower to 44 and also remains in a firm downtrend. Much of the housing data has stabilized, but the homebuilders who were surveyed seem to feel the future prospects of buyers traffic will remain depressed.
On the bright side, the future sales index jumped higher to a reading of 71. While the index also remains in a downtrend, the rate of change acceleration from the recent low is something to watch closely.
If we look at the regional breakdown, we can see where the activity is the most (least) robust.
In the Northeast, activity has accelerated nicely since late 2018 with the HMI jumping to 52.
The HMI for the South has also firmed in the past few months, increasing in the latest report to a reading of 70.
Areas of concern continue to be the West and Midwest regions. The HMI for the West ticked higher this month to a reading of 69, but the acceleration off the 2018 low has been lackluster considering the rebound in financial markets and lower interest rates.
The HMI for the Midwest has shown no recovery from the 2018 low reading and remains in a sharp trend of deceleration. Based on the HMI report and other high-frequency housing data points, the Midwest continues to struggle.
The single-family housing market appears to be a mixed bag depending on the region of the country. The South and the Northeast have rebounded nicely and while still remaining in a downtrend, are showing signs of re-acceleration. On the other hand, the West and the Midwest have not shown the type of recovery that many had expected at the end of 2018 and merit extra attention in the months ahead as the US economy hopes for a recovery in the residential real estate market.