The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of the health of the housing market, derived from a survey that asks builders to rate their perception of the current and future sale conditions for new homes and the traffic of prospective buyers.

Its relevance to a recession is significant because housing can be a leading economic indicator.

When the HMI is rising, it suggests that builders are confident about market conditions, which can signal economic expansion.

Conversely, a falling HMI can indicate waning builder confidence, potentially foreboding an economic slowdown or recession.

As housing activity can affect broader economic performance through related spending and investment, shifts in the HMI are closely monitored for signs of economic direction.

Recession Signal

Typically, a number below 50 on the HMI indicates more builders view conditions as poor than good, which could suggest a pessimistic outlook for the housing market. In terms of historical data, sharp or sustained declines in the HMI have often been associated with broader economic slowdowns.

When correlating these levels with the H.O.P.E. framework, it’s the trend and transition from peak levels that are watched, rather than a specific numeric value. Unfortunately we don’t have access to exactly how they analyse this.

Track this yourself

You can keep an eye on the Housing market on TradingView: https://www.tradingview.com/chart/v7ZG3yMA/?symbol=ECONOMICS%3AUSHMI