Sentiment among single family U.S. home builders chilled in February, right along with temperatures across much of the nation. Builder confidence fell two points to 55 on a monthly survey by the National Association of Home Builders.
That is the lowest level since October, 2014. Fifty is the line between positive and negative sentiment. Last February, amid similarly brutal winter weather, builder sentiment stood at 46.
"For the past eight months, confidence levels have held in the mid- to upper-50s range, which is consistent with a modest, ongoing recovery," said the association's Chief Economist David Crowe. "Solid job growth, affordable home prices and historically low mortgage rates should help unleash growing pent-up demand and keep the housing market moving forward in the year ahead."
The President's Day holiday weekend marks the start of the spring housing market, historically the strongest for sales. This year, with frigid temperatures and record snowfall in much of the country, builder open houses were, well, wide open. Even as they prepared for the long weekend, touting spring sales and incentives, builders largely had sober expectations.
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"We think the fundamentals and the demographics are there, but the job growth has been sluggish, and people just don't seem to have the urgency that they had a year or two ago, so that's really what we need to see back is the urgency," said Gary Chandler, division president for K Hovnanian in northern Virginia.
Confidence in current sales conditions weakened, falling one point to 61 on the the builder association's survey, but buyer traffic took a steeper five point dive to 39, well into negative territory. Sales expectations in the next six months was flat at 60.
Two of the three housing market index components posted losses in February compared to January. The component gauging current sales conditions edged one point lower to 61 while the component measuring buyer traffic fell five points to 39. The gauge charting sales expectations in the next six months held steady at 60. All the survey components, however, are higher than they were one year ago.
Looking at the three-month moving averages, builder confidence in the Northeast fell one point to 46, dropped two points in the Midwest and South. Only in the West, where warmer temperatures prevail, did builder confidence improve, up two points to 68.
"Overall, builder sentiment remains fairly solid, with this slight downturn largely attributable to the unusually high snow levels across much of the nation," said the builder association's Chairman Tom Woods, a home builder from Blue Springs, Mo.