US Homebuilder Confidence Declines Unexpectedly in February: NAHB
US homebuilder confidence declined unexpectedly this month, as inclement weather and heavy snowfall clouded an otherwise improving housing market.
The housing market index, courtesy of the National Association of Home Builders, dropped two points to 55 in February. Economists forecast an increase of one point to 58, putting the index only one point behind September’s nearly nine year high of 59.
A reading above 50 suggests builders are generally positive about housing market conditions.
“Overall, builder sentiment remains fairly solid, with this slight downturn largely attributable to the unusually high snow levels across much of the nation,” said NAHB chairman Tom Woods.
Added NAHB chief economist David Crowe, “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.”
Only one of the index’s three components improved in February. The gauge of current sales conditions rose one point to 61. The index tracking future sales held steady at 60, while the index of buyer traffic declined five points to 39.
On a regional level, builder confidence declined in three of the four major US regions. The index declined in the Northeast, Midwest and South. Housing conditions improved in the West, NAHB data showed.
Housing market conditions slowly rebounded in the latter half of 2014, as more plentiful jobs and declining mortgage rate boosted home sales.
The US economy added 257,000 jobs in January, following an upwardly revised gain of 147,000 in November and December combined. Average earnings finally showed signs of improvement, rising 0.5 percent or 12 cents to $24.75. Compared to January 2013, average earnings were up 2.2 percent.
Mortgage rates rose last week following the stronger than expected jobs report. The average commitment rate on a 30-year fixed rate mortgage was 3.69 percent in the week ending February 12, up 10 basis points over the previous week, according to Freddie Mac. The average commitment rate on a 15-year mortgage rose 7 basis points to 2.99 percent.
30-year mortgage rates averaged 4.17 percent in all of 2014, thanks to a sustained drop throughout most of the year. Rates were as high as 4.43 percent at the beginning of 2014.
The Commerce Department on Wednesday will report on housing starts and building permits, key gauges of overall housing activity. Economists expect housing starts to ease in January after rebounding sharply in December, as single-family starts rose to the highest level in more than six-and-a-half years. Housing starts are forecast to reach a seasonally adjusted annual rate of 1.07 million in January down from 1.089 million in December.
Building permits are forecast to rise to a seasonally adjusted annual rate of 1.068 million in January, up from 1.058 million.
The National Association of Realtors will release January existing home sales figures next week. Existing home sales rose in December, advancing 2.4 percent to a seasonally adjusted annual rate of 5.04 million.
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