Housing

Homebuilder Confidence Collapses in February

home building
Source: Thinkstock
The National Association of Home Builders (NAHB)/Wells Fargo housing market index for February fell 10 points to 46 from a reading of 56 in January. The reading was far below a consensus forecast of 56 from Bloomberg.

An index reading above 50 indicates that more builders view sales conditions as good than view them as poor. The February index marks the first drop below 50 since May of last year.

The current sales conditions subindex slumped 11 points in January, from 62 to 51, and the sales expectations subindex came in at 54, down six points month-over-month. The subindex that estimates prospective buyer traffic dropped nine points to come in at 31.

The NAHB’s chief economist noted:

Clearly, constraints on the supply chain for building materials, developed lots and skilled workers are making builders worry. The weather also hurt retail and auto sales and this had a contributing effect on demand for new homes.

Hombuilder stocks were not faring too well in early morning trading Tuesday, with Hovnanian Enterprises Inc. (NYSE: HOV) down nearly 3%, D.R. Horton Inc. (NYSE: DHI) down more than 2.5%, TRI Pointe Homes Inc. (NYSE: TPH) down nearly 2%, Lennar Corp. (NYSE: LEN) down 1.3% and KB Home (NYSE: KBH) down about 1.2%.

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