Builders remain cautious with only a hint of optimism about the coming selling season, as they watch heavy foreclosure rates continue to weigh down markets across the country and make it increasingly hard for prospective buyers to sell their existing homes.
The NAHB/Wells Fargo Housing Market Index released February’s numbers today, reporting a reading of 16 for the fourth consecutive month, a very low number for the index. In the 27 years since it began collecting data, the index has averaged a February reading of 49. Any number below 50 indicates that a majority of builders feel sales conditions for single-family homes are poor rather than good. The index has not recorded a reading above 50 since April 2006.
“Builders are telling us that some pockets of optimism have begun to emerge, but many prospective purchasers are concerned about selling their existing homes in the current market, or face difficulty securing credit for a home purchase—even when they are well-qualified,” David Crowe, NAHB’s chief economist, said in a press release today. “Adding these concerns to the severe difficulty that builders continue to confront in obtaining acquisition, development, and construction financing, you can understand why builder sentiment has not improved over the past four months.”
The index, which also gauges current sales, expectations for sales over the next six months, and prospective buyer traffic, showed some positive signs.
Sales improved two points over January to come in at 17, although the number was stationary year over year. Expectations for the coming months also went up a point to 25 but were down two points from the previous year. Traffic, at 12, remained flat on both a yearly and monthly basis.
Regionally, the Northeast saw the most improvement, moving up to 22, a two point increase from January and a four point increase year over year. The South also saw an improvement, moving up one point from the month before to reach a reading of 18, a point lower than it was in February of 2010.
Both the Midwest and West saw drops, the Midwest down one point on both a monthly and yearly basis, reaching a reading of 12. And the West dropped to 13, down two points from January and down one point from the previous year.
Claire Easley is senior editor, online, for Builder.
Learn more about markets featured in this article: Greenville, SC.