Builder confidence held firm in February’s Housing Market Index, falling just one point from January to a rating of 46, according to the National Association of Home Builders (NAHB).
Despite the decline, the Housing Market Index has risen strong in the last year, increasing from 29 in February 2012 (that’s a 59 percent increase!).
Housing Market Index Holds Firm in February
David Crowe, the chief economist for the NAHB, emphasized the Housing Market Index’s yearly gains in his analysis.
“Having risen strongly in 2012, the HMI hit a slight pause in the beginning of this year as builders adjusted their expectations to reflect the pace at which consumers are moving forward on new-home purchases,” Crowe said. “The index remains near its highest level since May of 2006, and we expect home building to continue on a modest rising trajectory this year.”
The more specific components of the Housing Market Index were:
- The component measuring current sales conditions fell one point to 51, but remained above the sacred 50 mark, which means more builders saw conditions as “good” than “poor.”
- Also, the component gauging sales expectations for the next six months rose one point to hit the 50 mark, which could be a good sign for the spring homebuying season.
- Traffic of prospective buyers, though, did slip four points to 32.
- Regionally, the West led the way with an index reading of 55, followed by the Midwest at 48, the South at 47 and the Northeast at 39.
Rick Judson, the NAHB’s chairman, noted that builder confidence has leveled out a bit the last four months, after rising through most of 2012; a number of factors, he said have contributed to that trend.
“This is partly due to ongoing uncertainties about job growth and consumer access to mortgage credit, but it’s also a reflection of the fact that builders are now confronting rising costs for building materials and, in some markets, limited availability of labor and lots as demand for new homes strengthens.”
We’ve covered rising building costs before, and it will definitely be something we’ll keep an eye on as the market begins to heat up over the next couple months.