Cold Keeps Builder Sentiment Under Wraps In February
February 18, 2004
4-Point Decline in Housing Market Index Partly Tied to Weather-Related Concerns
Unusually bad winter weather across much of the country was at least partly
to blame for a four-point decline in the National Association of Home Builders’ Housing
Market Index (HMI) for February, released today.
The monthly gauge of single-family builder confidence rested at 65, its lowest
level since July 2003’s similar reading.“The new-homes market
is still doing well, thanks to excellent financing conditions, great buyer
demographics and improving economic indicators. But many builders reported
drop-offs in buyers visiting model homes in early February, and a large percentage
attributed those declines to bad weather,” said NAHB President Bobby
Rayburn, a home and apartment builder from Jackson, Miss.
While the HMI is adjusted for normal seasonality, unusually bad weather conditions
can have an impact on the final reading, noted NAHB Economist Michael Carliner. “Also,
NAHB has anticipated a slowdown from the record pace of new-home sales in
the final months of 2003, and the latest HMI indicates builder expectations
are consistent with that. Still, the outlook for sales conditions remains
quite good heading into the spring home buying season.”
The HMI is derived from a monthly survey of builders that NAHB has been conducting
for nearly 20 years. Home builders are asked to rate current sales of single-family
homes as “good,” “fair” or “poor.” They
are also asked to rate traffic of prospective buyers as “high to very
high,” “average” or “low to very low.” Scores
for responses to each component are used to calculate a seasonally adjusted
index, where any number over 50 indicates that more builders view sales conditions
as good than poor.
Each of the HMI’s component indexes declined in February. The index
gauging traffic of prospective buyers slipped the most – down 5 points
to 46 – followed by the index gauging current sales of new single-family
homes, which was down 4 points to 72. The index gauging expected sales in
the next six months slid three points to 73.
Source: NAHB
Contact ALTA at 202-296-3671 or communications@alta.org.