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, slumped to 46 in February from 56 in January.
"Significant weather conditions across most of the country led to a decline in buyer traffic last month," according to NAHB Chairman Kevin Kelly. "Builders also have additional concerns about meeting ongoing and future demand due to a shortage of lots and labor."
"Clearly, constraints on the supply chain for building materials, developed lots and skilled workers are making builders worry," said NAHB Chief Economist David Crowe. "The weather also hurt retail and auto sales and this had a contributing effect on demand for new homes."
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 62, the sales expectations index for the next six months dropped to 54 from 60; and the traffic of prospective buyers index decreased to 31 from 40.
