Home builders are less optimistic this month thanks mostly to falling buyer traffic. Builders in the West had the most deterioration.
The Housing Market Index, which is based on a survey of the country’s home builders, landed at 58 for the month of February.
That was three points less than during the first month of this year. The January index was revised up from 60 as originally reported.
The seasonally adjusted index, which reflects single-family construction conditions, is jointly produced and reported by the National Association of Home Builders and Wells Fargo.
NAHB Chairman Ed Brady noted in the report that the dip in confidence is partly attributable to the high cost and lack of availability of lots and labor.
Despite the decline in builder confidence, an index of more than 50 indicates that more builders are optimistic than those who view conditions as poor.
“However, the fundamentals are in place for continued growth of the housing market,” NAHB Chief Economist David Crowe explained in the report. “Historically low mortgage rates, steady job gains, improved household formations and significant pent-up demand all point to a gradual upward trend for housing in the year ahead.”
The index is determined based on a monthly survey asking about current sales, expectations for the next six months and prospective buyer traffic.
Surveyed builders grew less optimistic about current sales, with that component of the index diminishing three points to 65 this month.
But the index for sales expectations inched up a point from January to 65.
A five-point tumble left the index reflecting buyer traffic at just 39.
The three-month moving average index in the West had the biggest decline, dropping three points to 72 this month.
Still, builders in the West remain most optimistic.
The least optimistic builders are in the Northeast, where the index fell two points from last month to 47.
