Despite the start of the busiest housing season and warming weather in much of the nation, U.S. home builders are steadily losing faith in their business.
A monthly survey of confidence among single-family builders fell in March for the third-straight month. The National Association of Home Builders index slipped 2 points to 53. Anything above 50 indicates positive sentiment. One year ago, builder sentiment was negative, at 46, but it soared to a high of 59 in September.
"The drop in builder confidence is largely attributable to supply-chain issues, such as lot and labor shortages, as well as tight underwriting standards," said 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."
That demand, however, is not translating into increased housing starts. Single-family home construction has been running at an anemic pace, with starts down nearly 7 percent in January month-to-month, according to the U.S. Census. This comes as the market for existing homes suffers from a severe lack of supply. Home builders are also keeping prices high and focusing largely on the higher end of the market, despite the need for less expensive homes.
Of the three index components, builder sentiment for current sales fell 3 points to 58, buyer traffic fell 2 points to 37, and sales expectations over the next six months held steady at 59.
Regionally, on a three-month moving average, sentiment fell 2 points in both the Northeast and the South. Sentiment rose 2 points in the Midwest, but the West saw a steep drop in confidence, down 7 points from February.
The February read on housing starts and building permits is scheduled for release on Tuesday at 8:30 a.m. EDT, from the U.S. Census.