Builder optimism has shown little improvement in recent months, according to the National Association of Home Builders/Wells Fargo Housing Market Index for March. The index gauges builder perceptions of current single-family home sales and sales expectations for the forthcoming six months as “good,” “fair” or “poor.”
The index by the National Association of Home Builders also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good rather than poor.
Overall, the index shows little improvement month over month in builder optimism: Builder confidence in the market for newly-built, single-family homes only rose one point to 47 in the month of March.
“The March HMI mirrors last month’s sentiment, as builders continued to be affected by poor weather and difficulties in finding lots and labor,” said NAHB Chairman Kevin Kelly.
“A number of factors are raising builder concerns over meeting demand for the spring buying season,” said NAHB Chief Economist David Crowe. “These include a shortage of buildable lots and skilled workers, rising material prices and an extremely low inventory of new homes for sale.”
The index’s components were mixed in March. The component gauging current sales conditions rose one point to 52 and the component measuring buyer traffic increased two points to 33. The component gauging sales expectations in the next six months fell one point to 53.
The three-month moving averages for regional HMI scores all fell in March. The Northeast dropped three points to 35, the Midwest fell three points to 53, the South posted a four-point decline to 49 and the West registered a two-point drop to 61.