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US Homebuilder Confidence Treads Water in March: NAHB

H.S. Borji
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US Homebuilder Confidence Treads Water in March: NAHB

US homebuilder confidence was relatively unchanged this month, as rising building material costs and a shortage of skilled workers weighed on sentiment.

The Housing Market Index, courtesy of the National Association of Home Builders, rose from 46 to 47 this month. A median estimate of economists in a Bloomberg survey called for 50, the level that separates positive sentiment from negative.

The index plunged ten points in February, as severe weather led to a sharp decline in buyer traffic. The March reading suggests the housing sector may need some time to rebound after the unusually cold winter.

Two of the index’s three main components rose this month. The gauge of current sales conditions rose one point to 52 after declining 11 points the previous month. The measure of homebuyer traffic increased two points to 33 after plunging nine points in February. The gauge of sales expectations in the next six months fell one point to 53.

The March reading “mirrors last month’s sentiment, as builders continued to be affected by poor weather and difficulties in finding lots and [labour],” said NAHB chairman Kevin Kelly.

“A number of factors are raising builder concerns over meeting demand for the spring buying season,” added NAHB chief economist David Crowe. “These include a shortage of buildable lots and skilled workers, rising materials prices and an extremely low inventory of new homes for sale.”

Inclement weather, combined with a lack of supply and stricter lending terms, have weighed on home sales this winter. Previously-owned home sales plunged in January to the lowest level in more than a year, raising concerns about the housing recovery. In addition to bad weather, prospective buyers have been dealing with progressively higher mortgage rates. According to Freddie Mac, the average 30-year fixed rate mortgage for the week ending March 13 was 4.37 percent, up from 3.63 percent a year earlier.

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