Builders' confidence in the market for new single-family homes fell as the National Association of Home Builders' housing market index — a monthly gauge of builder sentiment — slipped to 53 in March from 55 in February.
Thomson Reuters' poll of economists predicted the index would be 56.
"Even with this slight slip, the HMI remains in positive territory and we expect the market to improve as we enter the spring buying season," NAHB Chairman Tom Woods said.
"The drop in builder confidence is largely attributable to supply chain issues, such as lot and labor shortages as well as tight underwriting standards," according to NAHB Chief Economist David Crowe. "These obstacles notwithstanding, we are expecting solid gains in the housing market this year, buoyed by sustained job growth, low mortgage interest rates and pent-up demand."
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 dropped to 58 from 61, the sales expectations index for the next six months remained at 59; and the traffic of prospective buyers index fell to 37 from 39.
