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 44 in March from 46 in February.
Thomson Reuters' poll of economists predicted the index would grow to 47.
"Following eight consecutive months of improvement, builder confidence leveled off in January and has since edged down several points," according to NAHB Chairman Rick Judson. "Although many of our members are reporting increased demand for new homes in their markets, their enthusiasm is being tempered by frustrating bottlenecks in the supply chain for developed lots along with rising costs for building materials and labor. At the same time, problems with appraisals and credit availability remain considerable obstacles to completing deals."
"In addition to tight credit and below-price appraisals, home building is beginning to suffer growth pains as the infrastructure that supports it tries to re-establish itself," said NAHB Chief Economist David Crowe. "During the Great Recession, the industry lost home building firms, building material production capacity, workers who retreated to other sectors and the pipeline of developed lots. The road to a housing recovery will be a bumpy one until these issues are addressed, but in the meantime, builders are much more optimistic today than they were at this time last 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 47 from 51, the sales expectations index for the next six months rose to 51 from 50, and the traffic of prospective buyers index climbed to 35 from 32.
