Spring is almost here, and the National Association of Home Builders Housing Market Index (NAHB HMI) thawed slightly in March.
The current reading of 47 is one point higher than for February, but still indicates pessimism among a majority of builders surveyed. Analysts expected a March reading of 50.
The gauge of builder confidence stayed near its lowest level since May.
March's NAHB HMI reading remained below the benchmark reading of 50, which indicates that an equal number of builders are positive about housing market conditions as those who are negative.
A reading over 50 indicates that more builders are positive than negative. Last August the NAHB HMI reading reached 58, its highest level since 2005.
Kevin Kelly, NAHB's chairman said that builder concerns included a lack of land available for development, the lagging effects of severe winter weather and labor shortages.
NAHB HMI Details Show Regional Variances
The NAHB HMI national reading is based on builders' views of three aspects of housing markets. The March reading of 47 is based on three components. The reading for prospective buyer traffic in new home developments rose by two points to 33.
Builder expectations for present sales of single-family homes rose from 51 to 52. Builder confidence in home sales in coming months fell from a reading of 54 to 53.
Rising mortgage rates and home prices along with inconsistent labor markets influenced builder confidence concerning future home sales.
March Readings For Regional Home Builder Confidence Were Varied:
- Northeast: March's reading was five points lower at 29.
- Midwest: Builder confidence gained three points in March for a reading of 52.
- West: Builder confidence dropped by five points to a reading of 53.
- South: March's reading rose by two points to 48.
In related news, the Department of Commerce reported housing starts for February dropped to 907,000 as compared to January's reading of 909,000 housing starts and expectations of 908,000 housing starts.
Building permits for February rose by 7.70 percent to their second highest level since the recession for a total of 1.02 million permits. The rise in building permits was attributed to construction plans for condominium complexes and rental units.