Builders’ confidence in the market for new single-family homes held as the National Association of Home Builders' housing market index was steady at 72 in February.

NAHB housing market index

IFR's poll of economists predicted the index would be 72.

“Builders are excited about the pro-business political climate that will strengthen the housing market and support overall economic growth,” NAHB Chairman Randy Noel said. “However, they need to manage supply-side construction hurdles, such as shortages of labor and lots and building material price increases.”

The HMI gauge of future sales expectations has reached a post-recession high, an indicator that consumer demand for housing should grow in the months ahead,” according to NAHB Chief Economist Robert Dietz. “With ongoing job creation, increasing owner-occupied household formation, and a tight supply of existing home inventory, the single-family housing sector should continue to strengthen at a gradual but consistent pace.”

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 dipped to 78 from 79, the sales expectations index for the next six months rose to 80 from 78; and the traffic of prospective buyers index remained at 54.

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Gary Siegel

Gary Siegel

Gary Siegel has been at The Bond Buyer since 1989, currently covering economic indicators and the Federal Reserve system.