Homebuilder Confidence Slips in February

The National Association of Home Builders (NAHB)/Wells Fargo housing market index for February dropped three points to 58 from January’s revised reading of 61. The reading was lower than the consensus forecast of 61 from a Bloomberg survey of economists. In October 2015 the NAHB index reached 64, its highest level since the end of the housing boom in late 2005.

An index reading above 50 indicates that more builders view sales conditions as good than view them as poor.

The current sales conditions subindex fell three points in February to settle at 65, and the subindex that estimates prospective buyer traffic dropped from 44 to 39. The subindex measuring sales expectations for the next six months rose a point to 65.

The NAHB’s chief economist said:

Builders are reflecting consumers’ concerns about recent negative economic trends. However, the fundamentals are in place for continued growth of the housing market. Historically low mortgage rates, steady job gains, improved household formations and significant pent up demand all point to a gradual upward trend for housing in the year ahead.

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In the NAHB’s regions, the three-month moving average index slipped in all four. In the Northeast and South the index declined by two points to 47 and 59, respectively. The index fell by one point in the Midwest to a reading of 57, and it fell three points in the West to a February reading of 72.

The current average interest rate for a conventional 30-year fixed mortgage loan is 3.66%, according to Mortgage News Daily. The 52-week range for conventional 30-year fixed loans is 3.55% to 4.20%.

The NAHB/Wells Fargo housing market index has remained in the 60-point range since June. Prior to mid-2013 the index had not risen to 50 since mid-2006.