The National Association of Home Builders (NAHB)/Wells Fargo housing market index for February slipped to 65, down two points from an unrevised January reading of 67. Economists polled by Bloomberg were expecting an index reading of 68.
An index reading above 50 indicates that more builders view sales conditions as good than view them as poor. NAHB Chairman Granger MacDonald noted that while builders remain optimistic, the index is settling back into a normal range. He also noted “regulatory burdens” he called a “major challenge to our industry” and how the NAHB hopes to work with Congress and President Trump “to help alleviate some of the pressures that are holding small businesses back and making homes less affordable.”
The current sales conditions sub-index for February fell from 72 to 71, and the sub-index that estimates prospective buyer traffic dropped from 51 to 46. The sub-index measuring sales expectations for the next six months fell three points to 73.
The NAHB’s chief economist said:
With much of the decline this month resulting from a decrease in buyer traffic, builders continue to struggle to minimize costs while dealing with supply side challenges such as a lack of developed lots and labor shortages. Despite these constraints, the overall housing market fundamentals remain strong and we expect to see continued growth this year as some of these concerns are addressed.
In the NAHB’s regions, three-month moving average index changes were mixed in all four regions. In the Northeast, the index fell two points to 50, it rose a point to 65 in the Midwest, slipped a point to 67 in the South and remained unchanged in the West at 79, a third consecutive month with the same reading.
The NAHB/Wells Fargo housing market index has remained in the 60-point range since June of 2015. Prior to mid-2013, the index had not risen to 50 since mid-2006.