The new home market is getting no spring lift whatsoever at least based on the National Association of Home Builder’s housing market index, which missed expectations for the last seven out of eight months, coming in at a lower-than-expected 47.
The index has been stuck below breakeven 50 for three months now, even though it’s the start of the “spring buying season.”
The homebuilder index weakness is centered in traffic, which remains far below 50 at 32.
Details for March once again showed serious weakness in traffic, at 33 versus February's 31. Weakness in traffic points to lack of participation by first-time homebuyers and the importance of all-cash buyers who have been holding up the housing market, and who are now disappearing.
The official position of NAHB is that there is confidence in future activity, but there's not a lot to support that. Expectations for tomorrow's, mortgage applications, housing starts and permit data are no better than flat.
“Builder confidence has been in a holding pattern the past three months,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “Looking ahead, as the spring home buying season gets into full swing and demand increases, builders are expecting sales prospects to improve in the months ahead.”
The housing market index posted a record 10-point loss to 46 in February and hasn't yet recovered, in what is a bad omen for the housing sector where many are banking on spring strength.
“Job growth is proceeding at a solid pace, mortgage interest rates remain historically low and home prices are affordable,” said NAHB Chief Economist David Crowe. “While these factors point to a gradual improvement in housing demand, headwinds that are holding up a more robust recovery include ongoing tight credit conditions for home buyers and the fact that builders in many markets are facing a limited availability of lots and labor.”
Present sales show marginal growth unchanged for a third month. The West tumbled nine points to 51 and the Midwest posted a four-point decline to 49. The Northeast and South each dropped two points to 33 and 47, respectively.
Oddly, the Northeast saw prospective buyer traffic rise while all other regions fell while the West crumbled.