Builders' confidence in the market for new single-family homes slipped as the National Association of Home Builders' housing market index - a monthly gauge of builder sentiment - fell to 46 in February from 47 in January.
Thomson Reuters' poll of economists predicted the index would grow to 48.
"Following solid gains over the past year, builder confidence has essentially leveled out and held in the same three-point range over the last four months," according to NAHB Chairman Rick Judson. "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."
"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," said NAHB Chief Economist David Crowe. "The index remains near its highest level since May of 2006, and we expect home building to continue on a modest rising trajectory this year."
Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "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 that more builders view sales conditions as good than poor.
The current single-family home sales index fell to 51 from 52, the sales expectations index for the next six months rose to 50 from 49, and the traffic of prospective buyers index dropped to 32 from 36.