February Home Builder Confidence Hits Nine-Month Low

Sorohan, Mike msorohan@mba.org

February 17, 2016


The National Association of Home Builders said builder confidence in the market for newly built single-family homes fell in February to its lowest level in nine months.

The NAHB/Wells Fargo Housing Market Index fell three points in February from an upwardly revised January reading (61). The component measuring sales expectations in the next six months rose one point to 65. The index measuring current sales condition fell three points to 65, while the component charting buyer traffic dropped five points to 39. Scores are measured with any reading above 50 suggesting building conditions are favorable.

All four regions saw declines on a three-month moving average. The Midwest fell one point to 57, the West fell three points to 72 and the Northeast and South each posted a two-point decline to 47 and 59, respectively.

"Builders are reflecting consumers' concerns about recent negative economic trends," said NAHB Chief Economist David Crowe. "However, the fundamentals are in place for continued growth of the housing market. Historically low mortgage rates, steady job gains, improved household formations and significant pent up demand all point to a gradual upward trend for housing in the year ahead."

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said growth fears may be spilling over into builder sentiment, although land availability and labor quality may also be weighing on builder optimism.

"Although builder sentiment has moderated recently, the index still points to continued gains in the housing sector," Vitner said.

"Though builders report the dip in confidence this month is partly attributable to the high cost and lack of availability of lots and labor, they are still positive about the housing market," said NAHB Chairman Ed Brady. "Of note, they expressed optimism that sales will pick up in the coming months."

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