Builder confidence was unchanged from February's revised reading of 58 in March, according to the Housing Market Index (HMI) release from the National Association of Home Builders/Wells Fargo Tuesday morning. This is the second month that the composite score has fallen below 60 since July 2015 but marks a six-point increase year-over-year.
Note: any HMI score above 50 indicates that more home builders believe conditions are improving than those who believe they're deteriorating.
All three components of the monthly survey posted year-over-year gains, but show mixed results month-over-month. Traffic among prospective buyers rebounded slightly from 39 to 43 in March, while builder confidence in future sales over the next six months dropped 3 points to a reading of 61. Builders rate present sales conditions in March at a score of 65, the same reading as in February.
“While builder sentiment has been relatively flat for the last few months, the March HMI reading correlates with NAHB’s forecast of a steady firming of the single-family sector in 2016,” said NAHB Chief Economist David Crowe, in a statement. “Solid job growth, low mortgage rates and improving mortgage availability will help keep the housing market on a gradual upward trajectory in the coming months.”
Builder confidence is trending up in the Northeast and South region, with scores rising to 46 and 59, respectively. Builders in the West and Midwest, however, believe that the conditions in March are unchanged from the earlier month, reporting a reading of 69 and 58, respectively. The West market, by far, is still the best performing market for builders.
In spite of a flat month in March for the composite score, builder confidence is still stronger than its pre-recession peak in 2006. Individual components of the HMI dropped to their lowest point in December 2009, when builders rated current sales conditions at an 8, future sales expectations at a 17, and traffic from prospective buyers at a 7.
Read more about today's release from the NAHB >>