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Builders Remain Bullish on Housing Outlook in February Despite Rainy Weather

Home builders surveyed this month continued to sound an overall positive note on the strength of the market for newly built single-family homes, according to the NAHB/Wells Fargo Housing Market Index (HMI), which was released on Feb. 15.

Although unusually wet weather conditions across much of the country helped push the index down two points for February, builders' optimistic expectations for the next six months have held steady since the beginning of the year.

“On the whole, builders are still expressing very positive views of conditions in the housing market," said NAHB President Dave Wilson. "Mortgage interest rates have actually improved since January, and builder confidence as measured by the HMI is ahead of where it was this time last year.”

“The main concern builders are citing right now pertains to the availability and pricing of lots for development — which itself is a symptom of strong buyer demand,” said NAHB Chief Economist David Seiders. “Demand, in turn, continues to be driven by solid job and income growth, low mortgage rates and the investment aspects of homeownership.”

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Derived from a monthly survey that NAHB has been conducting for nearly 20 years, the NAHB/Wells Fargo Housing Market Index includes scores from builders on current sales of single-family homes, prospects for sales in the next six months and the traffic of prospective buyers. Any number over 50 on the seasonally adjusted index indicates that more builders view sales conditions as good than poor.

The HMI declined two points to 68 in February, due entirely to a three-point drop in the index of current sales, which was most likely related to above-average precipitation. Some of the builders surveyed cited weather as a factor. Even so, the current-sales component registered a solid 74. Expected sales in the next six months and traffic of prospective buyers held steady at 78 and 50, respectively.

Regionally, HMI scores were mixed in February. At 79, a two-point decline from the prior month, builders in the West were the most optimistic in the country, followed by the South, at 73, off one point; the Northeast, at 67, up two points; and the Midwest, down one point to 54.
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