Homebuilder confidence has hit a wall, according to March's National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index report, released today.
After cold weather and supply constraints pushed February's reading down to a lowly 46 points, March's 47 points aren't anything to write home about. Analysts had been hoping for a significantly stronger comeback to 50.
Any number over 50 indicates that more builders view sales conditions as good than poor, a point reached for the first time since April 2006 in June. The survey looks at builder confidence in newly built single-family homes. This latest report keeps confidence in contraction territory, a potentially troubling sign for the housing market.
"The March HMI mirrors last month's sentiment, as builders continued to be affected by poor weather and difficulties in finding lots and labor," said NAHB Chairman Kevin Kelly in a statement today.
Digging deeper into components, current sales conditions increased one point to 52, prospective buyer traffic increased two points to 33, and future sales expectations for the next six months dipped one point to 53.
In a statement NAHB Chief Economist David Crowe said there are several reasons for the continued slump:
A number of factors are raising builder concerns over meeting demand for the spring buying season. These include a shortage of buildable lots and skilled workers, rising materials prices and an extremely low inventory of new homes for sale.
The overall index had been above 50 from June through January, reflecting a strengthening housing market. The latest reading, based on responses from 296 builders, comes as the spring home-selling season gets going. The season typically sets the pattern for residential hiring and building construction in the ensuing months.
-- Material from The Associated Press was used in this report.
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