Economic Snapshot: Housing market index, small business optimism dip slightly

Both the housing market index and the small business optimism index declined slightly this month after consistent increases in previous months, though home builders still view conditions as good overall and small businesses believe now is the time to expand. 

Housing market index

The National Association of Home Builders housing market index fell to 54, following four months of consecutive gains that reached 59 in September.

All three HMI components declined this month. The indexes gauging current sales conditions and traffic of prospective buyers dropped six points to 57 and 41, respectively. The index measuring expectations for future sales decreased three points to 64.

When comparing three-month moving averages for regional HMI scores, the Northeast and the Midwest both remained flat in October, at 41 and 59 respectively. The South increase two points to 58 and the West slipped one point to 57.

Any number above 50 indicates that more builders view sales conditions as good than poor.

Small business optimism

The NFIB small business optimism index dipped slightly in September, falling 0.8 points to 95.3. The index is now reporting five points below its pre-recession (1973-2007) average. Four index components improved and six components declined.

Current job openings and plans to make capital outlays saw the steepest decreases, dropping five points each from last month to 21 and 22 percent respectively. These two indexes are directly relevant to GDP growth and hiring.

However, small businesses who believe now is a good time to expand rose four points from August to September, now at 13 percent. Small business owners increased employment by an average of 0.24 workers per firm last month and 50 percent of owners hired or attempted to fire in the last three months.

Forty-two percent of small business owners reported there were few or no qualified applicants available for open positions. Plans to increase employment fell one point to nine percent, still a solid reading for this index.