Confidence among the nation's home builders held steady in March, although a majority of analysts had expected it to improve slightly. Even lower mortgage rates since the start of the year don't seem to be helping.
The National Association of Home Builders/Wells Fargo Housing Market Index was unchanged at 58. Sentiment had been as high as 62 last October, but this month's reading is an improvement over March of 2015, when sentiment stood at 52.
"Confidence levels are hovering above the 50-point mid-range, indicating that the single-family market continues to make slow but steady progress," said NAHB Chairman Ed Brady. "However, builders continue to report problems regarding a shortage of lots and labor."
Of the index's three components, the one measuring current sales conditions was strongest but unchanged at 65 in March. Sales expectations in the next six months fell three points to 61. This is surprising given that spring is considered the busiest season for the housing market. The component measuring buyer traffic rose four points to 43 but is the only measure in negative territory.
"While builder sentiment has been relatively flat for the last few months, the March HMI reading correlates with NAHB's forecast of a steady firming of the single-family sector in 2016," said NAHB Chief Economist David Crowe. "Solid job growth, low mortgage rates and improving mortgage availability will help keep the housing market on a gradual upward trajectory in the coming months."
The home builders could benefit this spring from a severe lack of existing homes for sale. They have not, however, been producing homes at near the level of demand nor even near historical norms, never mind all the pent-up demand from the recession.
Builders have also been focused on the higher end of the market, raising prices because that is where they see the most demand. Housing starts have been most active in multi-family apartments, not in single-family homes, where they are most needed.
Regionally, on a three-month moving average, the Midwest posted a one-point gain to 58 while the South was unchanged at 59. The West saw a three-point decline to 69 while the Northeast fell one point to 46, the only region still seeing negative builder sentiment.