Index shows a slip in homebuilders’ confidence

Index shows a slip in homebuilders’ confidence

Builder confidence ticked down slightly in February, according to a survey, essentially leveling out at a level slightly below “good.”

Builder confidence in how the market for newly constructed single-family homes will fare remained pretty much the same as last month, declining a point to 46, according to the National Assn. of Home Builders/Wells Fargo Housing Market Index.

“This is partly due to ongoing uncertainties about job growth and consumer access to mortgage credit,” Rick Judson, a home builder and NAHB chairman, said in a statement. “But it’s also a reflection of the fact that builders are now confronting rising costs for building materials and, in some markets, limited availability of labor and lots as demand for new homes strengthens.”

The index is derived from a monthly survey that asks builders to rate their expectations for sales for the next six months as “good,” “fair” or “poor.”

The survey also asks builders to rate the volume of visits by prospective buyers.

All of these responses are scored to create an index. Any reading above 50 on that index means that more builders surveyed viewed their prospects as “good” than not.

The U.S. housing market has recovered significantly from deep depths over the last year, lifting the stocks and prospects of major builders. Jim O’Sullivan, chief U.S. economist for High Frequency Economics, noted in an emailed analysis that even with February’s decline in builder confidence, the sentiment index is still up considerably from its most recent lows.

“It is up from 28 one year ago and 16 two years ago,” he wrote. “Still, the report suggests that the housing recovery may be temporarily pausing.”

Source: Los Angeles Times