Homebuilder Sentiment Remains Near Highest Level Since 1999

Luke Sharrett/Bloomberg News

Confidence among American homebuilders held steady in February near the highest level since 1999, suggesting that demand for housing is expected to remain strong, according to data Feb. 15 from the National Association of Home Builders/Wells Fargo.

Highlights of NAFB Sentiment for February

• Housing Market Index unchanged at 72 from the prior month (matching estimate).

• Measure of six-month sales outlook climbed 2 points to 80, highest since 2005.

• Current sales gauge for single-family homes cooled to 78 from 79; index of buyer traffic unchanged at 54.

Key Takeaways

The report signals that home construction will continue to pick up as economic conditions remain favorable.

A solid job market and rising wages will keep supporting demand for houses.

At the same time, mortgage rates have been increasing in recent weeks and could become a headwind, and rising material prices and shortages of labor remain hurdles for builders.

In addition, the recent tax legislation has the potential to reduce demand in some areas because of limits on deductions for mortgage interest, and on state and local taxes.

Official’s View

The gauge of future sales indicates that “consumer demand for housing should grow in the months ahead,” Robert Dietz, chief economist at NAHB, said in a statement. “With ongoing job creation, increasing owner-occupied household formation, and a tight supply of existing home inventory, the single-family housing sector should continue to strengthen at a gradual but consistent pace.”

Other Details

• Regional indexes declined in Northeast and West; Midwest gauge rose, while South index was unchanged.

• Readings greater than 50 indicate more respondents reported good market conditions.