Daily Forecast Update: Housing Market Index and Industrial Production

March 15, 2010

By Arun Barman, Research Economist 

• NAR's monthly official forecast as of March 4th
• GDP 2010 Q1: +2.6% ↑
• GDP 2010 Q2: +1.9%
• DP 2010 Q3: +2.3%
• Unemployment rate by the mid-2010: 10.1%
• Average 30-year fixed mortgage rate by the mid-2010: 5.4%

What does today's data mean for REALTORS® and consumers?

• Home builders continue to struggle in this economy, with confidence among builders extremely low. The data out today from the home builders tracks the official housing starts numbers (which will be out tomorrow) very closely.
• Industrial production rose very slightly. However, the manufacturing sector is still weak and the industrial sector is less productive than its potential.

Housing Market Index (NAHB/Wells Fargo)

• The Housing Market Index which measures home builders’ sentiment was down to a level of 15 in March from 17 in February. Generally, levels over 50 represent overall positive sentiment.
• Each of the three components (present single-family sales, future 6-month sales, and traffic of prospective buyers) fell in March’s index.
• Regionally, the index increased over the previous month in the Northeast and West, and it fell in the Midwest and South.
• The chart below shows the relationship between the NAHB Index and Housing Starts which come out tomorrow from the Census Bureau.

Industrial Production (Federal Reserve Board)

• Industrial production which measures total output of U.S. factories and mines rose 0.1 percent in February.
• The manufacturing portion of the index declined, while mining and utilities increased. Weather was an important factor as large storms in the Northeast may have hurt manufacturing production; however, utilities were up possibly as a result of the extreme weather conditions.
• Capacity utilization which measures the total resource utilization of all the nation’s output facilities was up slightly to 72.7%. Essentially, it essentially measures how much the actual production matches up with the potential production. Typically, in good economic times the capacity utilization is above 80%, so the economy is still below that historical level.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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