Builder confidence in the market for newly built, single-family homes in February fell two points to a level of 55 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released Feb. 17.
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component then are used to calculate a seasonally adjusted index where any number of more than 50 indicates that more builders view conditions as good rather than poor.
Two of the three HMI components posted losses in February. The component gauging current sales conditions edged one point lower to 61 while the component measuring buyer traffic fell five points to 39. The gauge charting sales expectations in the next six months held steady at 60.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell a single point to 46, the Midwest and South each posted a two-point drop to 54 and 57, respectively, and the West rose two points to 68.
“Overall, builder sentiment remains fairly solid, with this slight downturn largely attributable to the unusually high snow levels across much of the nation,” NAHB Chairman Tom Woods said.
“For the past eight months, confidence levels have held in the mid- to upper-50s range, which is consistent with a modest, ongoing recovery,” NAHB Chief Economist David Crowe said. “Solid job growth, affordable home prices and historically low mortgage rates should help unleash growing pent-up demand and keep the housing market moving forward in the year ahead.”