LOS ANGELES, Calif. – Confidence among U.S. homebuilders slipped this month from the 6 1/2 year high it reached in January, with many builders reporting less traffic by prospective customers before the critical spring home-buying season.
The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday dipped to 46 from 47 in January. It was the first monthly decline in the index since April.
Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006, when it was 51. It began trending higher in October 2011, when it was 17.
The latest index, based on responses from 402 builders, comes as the U.S. housing market is strengthening after stagnating for roughly five years after the housing boom collapsed.
Steady job gains and near-record-low mortgage rates have encouraged more people to buy homes. Prices have been rising. In part, that’s because the supply of previously occupied homes for sale has thinned to the lowest level in more than a decade. And the pace of foreclosures, while still rising in some states, has slowed sharply on a national basis.
The trends have led homebuilders to increase construction. Last year, builders broke ground on the most new homes in four years.
All told, sales of new homes jumped nearly 20 per cent last year to 367,000, the most since 2009. Still, many economists don’t foresee a full housing recovery before 2015 at the earliest.
“The index remains near its highest level since May of 2006, and we expect homebuilding to continue on a modest rising trajectory this year,” said David Crowe, the NAHB’s chief economist.
Even so, builders remain concerned about the sturdiness of the U.S. economy and unemployment, which ticked up to 7.9 per cent last month from 7.8 per cent in December.
Many builders are facing higher costs for building materials and having trouble obtaining financing for construction. Some also are facing a shortage of workers in markets where residential construction has picked up sharply, such as Texas and Arizona.
An index that measures current sales conditions fell one point to 51. And a gauge of traffic by prospective buyers declined four points to 32 from 36 in January.
But builders’ outlook for sales in the next six months improved one point to 50.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB statistics.