Builder confidence slips but outlook for housing market looking up

Homebuilder confidence fell 2 points in March with the housing market is expected to pick up pace heading into the spring buying season. 

The recent gauge of optimism in the market for newly built, single-family homes dropped to 53 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released on Monday.

{mosads}”Even with this slight slip, the HMI remains in positive territory and we expect the market to improve as we enter the spring buying season,” said NAHB Chairman Tom Woods, a homebuilder from Blue Springs, Mo.

Any number over 50 indicates that more builders view conditions as good than poor.

“The drop in builder confidence is largely attributable to supply chain issues, such as lot and labor shortages as well as tight underwriting standards,” said David Crowe, NAHB’s chief economist.

“These obstacles notwithstanding, we are expecting solid gains in the housing market this year, buoyed by sustained job growth, low mortgage interest rates and pent-up demand,” Crowe said. 

Two of the three index components posted losses in March.

A gauge of current sales conditions fell 3 points to 58, while the component measuring buyer traffic dropped 2 points to 37.

Meanwhile, sales expectations in the next six months held steady at 59.

Regionally, the Northeast and South each posted a 2-point drop to 43 and 55, respectively.

The Midwest rose 2 points to 56, while the West fell 7 points to 61.