Real Estate

Builder confidence slips for third consecutive month

But remains at strong level

Builder confidence dipped in March, falling for the third consecutive month, however it is still at a high level historically, according to the latest Housing Market Index released by the National Association of Home Builders and Wells Fargo.

The index decreased one point to a level of 70 in March, down from a downwardly revised reading in February, which was previously set at a post-recession high of 72, according to the index.

“Builders’ optimism continues to be fueled by growing consumer demand for housing and confidence in the market,” NAHB Chairman Randy Noel said. “However, builders are reporting challenges in finding buildable lots, which could limit their ability to meet this demand.”

In the most recent housing starts report, the U.S. Census Bureau showed new home starts on single-family homes decreased slightly in February from the month before.

Derived from a monthly survey that NAHB has been conducting for 30 years, the 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 are then used to calculate a seasonally adjusted index where any number over 50 indicates most homebuilders view conditions as good rather than poor.

The component looking at current sales conditions held steady at 77 while the chart that looks at sales expectations over the next six months dropped two points to 78. The index measuring buyer traffic fell three points to 51.

“A strong labor market, rising incomes and a growing economy are boosting demand for homeownership even as interest rates rise,” NAHB Chief Economist Robert Dietz said. “With these economic fundamentals in place, the single-family sector should continue to make gains at a gradual pace in the months ahead.”

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