Builders Less Confident Heading Into Spring

March 17, 2015

Homebuilders' confidence in the newly built, single-family home market dipped slightly in March, mostly due to supply chain issues, the National Association of Home Builders/Wells Fargo Housing Market Index reported yesterday.

Lot and labor shortages, as well as tight underwriting standards for credit, are the main factors in the decline in builder sentiment, says NAHB Chief Economist David Crowe. "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."

Builder confidence dropped two points to a level of 53 in March. Any reading above 50 shows more builders view conditions as "good" than "poor." Builders' opinion of current sales conditions dropped three points in March to 58, while buyer traffic outlook dropped two points to 37.

Regionally, the Northeast and South posted a two-point drop in March to 43 and 55, respectively. Meanwhile, the index measuring builder confidence in the Midwest increased two points to 56 and the West dropped seven points to 61.

Source: National Association of Home Builders