Real Estate

Builder confidence shows little monthly movement

The past year showed continued gains in builder confidence in the market for newly built, single-family homes, but essentially leveled out in the same three-point range over the last four months.

Builder confidence remained unchanged in February, with a small decline of one point to 46 from the month before, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

“This is partly due to ongoing uncertainties about job growth and consumer access to mortgage credit, 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,” noted NAHB Chairman Rick Judson, a home builder from Charlotte, N.C.

Nonetheless, the index remains near its highest level since May 2006 and is expected to continue its upward trajectory throughout 2013.

“Having risen strongly in 2012, the HMI hit a slight pause in the beginning of this year as builders adjusted their expectations to reflect the pace at which consumers are moving forward on new-home purchases,” observed NAHB Chief Economist David Crowe.

The HMI component gauging current sales conditions dropped one point to 51 in February, continuing to hold above the mid-point of 50 for a third consecutive month. Any number over a 50 indicates that most homebuilders view conditions as good than poor.

The component gauging sales expectations in the next six months increase by one point to 50, the critical mid-point. However, the component that gauges traffic of prospective buyers dropped four points to 32.

“Weak traffic points to weak sales in the months ahead, but for right now the report’s two sales components remain steady with present sales currently at 51 and with sales six months out at 50,” noted Econoday.

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