February Builder Confidence Dips Slightly, Remains ‘Solid’
Builder confidence for newly built single-family homes fell by one point to 74 in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
However, NAHB said the past three monthly readings mark the highest sentiment levels since December 2017. The HMI index gauging current sales conditions fell one point to 80; the component measuring sales expectations in the next six months fell by one point to 79; and the gauge charting traffic of prospective buyers also decreased by one point to 57.
Regionally, three-month moving averages saw the Northeast rise by one point to 63; the Midwest up by one point to 67 and the South two points higher to 78. The West fell by one point to 83.
“Steady job growth, rising wages and low interest rates are fueling demand but builders are still grappling with increasing construction and development costs,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J.
Last week, the Mortgage Bankers Association’s Builder Applications Survey reported mortgage applications for new home purchases in January increased by 40 percent from December and by 35.3 percent from a year ago.
MBA estimated new single-family home sales at a record-pace seasonally adjusted annual rate of 865,000 units in January, an increase of 25.5 percent from the December pace of 689,000 units. On an unadjusted basis, MBA estimated 66,000 new home sales in January, an increase of 37.5 percent from 48,000 new home sales in December.
“At a time when demand is on the rise, regulatory constraints along with a shortage of construction workers and a dearth of lots are hindering the production of affordable housing in local communities across the nation,” said NAHB Chief Economist Robert Dietz. “And while lower mortgage rates have improved housing affordability in recent months, accelerating price growth due to limited inventory may offset some of that effect.”