Economist's Commentary: August 18, 2008

Quick Take on the Economy: August 18, 2008

By George Ratiu

An indicator of sales and expectations for future home building, the Housing Market Index stayed flat for the month of August, at a value of 16. The index is down 27 percent compared with a year ago.
The individual components of the index recorded slight upticks in values. "Single-family sales: Present" posted a value of 16 for August, compared with 15 in July. "Single-family sales: Next 6 Months" recorded an August value of 25, two points higher than July's 23. "Traffic of Prospective Buyers" component was the same as last month's at 12.
An index value of 50 represents markets in balance, where responses from builders are even between positive and poor opinions about the market conditions. Values higher than 50, point to more optimism about the market, whereas values below 50 represent more pessimistic opinions about market conditions.

Builders reflect difficult market conditions, with a housing market below historical averages.
The upticks in single-family sales value may point to a slight improvement in expectations.
Builders need to further hold back to trim overall housing inventory.

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