Builders’ confidence in the market for new single-family homes grew as the National Association of Home Builders' housing market index climbed to 62 in February from 58 in January.
IFR's poll of economists predicted the index would be 59.
“Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment,” NAHB Chairman Randy Noel said. “In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season.”
“Builder confidence levels moved up in tandem with growing consumer confidence and falling interest rates,” according to NAHB Chief Economist Robert Dietz. “The five-point jump on the six-month sales expectation for the HMI is due to mortgage interest rates dropping from about 5 percent in November to 4.4 percent this week. However, affordability remains a critical issue. Rising costs stemming from excessive regulations, a dearth of buildable lots, a persistent labor shortage and tariffs on lumber and other key building materials continue to make it increasingly difficult to produce housing at affordable price points.”
Derived from a monthly survey that NAHB has been conducting for 30 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 grew to 67 from 64, the sales expectations index for the next six months climbed to 68 from 63; and the traffic of prospective buyers index rose to 48 from 44.
