Posted February 19, 2015

Snow Puts Slight Chill in Builder Confidence

Builder confidence in the market for newly built, single-family homes in February fell two points to a level of 55 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), writes economist David Crowe on the NAHB's Eye On Housing. He says the slight downturn is largely attributed to heavy snows we've been dealing with, pointing out that "builder sentiment remains fairly solid."

For the past eight months, confidence levels have held in the mid- to upper 50s range, which is consistent with a modest, ongoing recovery. Solid job growth, affordable home prices and historically low mortgage rates should help unleash growing pent-up demand and keep the housing market moving forward in the year ahead.

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “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 conditions as good than poor.