Home builders this month expressed a solid outlook for the housing market for newly built, single-family homes, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index released today.
The index dipped two points to 68 in February, and builder expectations for the next six months held steady from the beginning of the year.
The monthly index surveys home builders about current sales of new homes and prospects for sales in the next six months. Builders rate conditions as “good,” “fair” or “poor,” and also rate traffic of prospective buyers as ” high to very high,” “average” or “low to very low.” Scores for each component are used to calculate a seasonally adjusted index where any number above 50 indicates that more builders view sales conditions as good than poor.
The February index decline was due to a three-point dip in the component gauging current sales activity to 74. Some builders surveyed for the index mentioned the weather as a factor. The components gauging expected sales in the next six months and traffic of prospective buyers held steady at 78 and 50, respectively.
Regional housing market index scores were mixed in February. With a two-point decline to 79, western builders were still the most optimistic. Southern and Midwestern builders each posted one-point index declines, to 73 and 54, respectively, while builders in the Northeast posted a two-point gain to 67 this month
“On the whole, builders are still expressing very positive views of conditions in the housing market. Mortgage interest rates have actually improved since January, and builder confidence as measured by the (index) is ahead of where it was this time last year,” NAHB President Dave Wilson said.
Builders’ main concern is over availability and pricing of lots for development, NAHB Chief Economist David Seiders said. “Demand, in turn, continues to be driven by solid job and income growth, low mortgage rates and the investment aspects of home ownership,” he added.
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