Homebuilder Confidence Cooling

Optimism among home builders is cooling noticeably, based on the housing market index which fell 3 points to 58 for the lowest reading since May last year. But 58 is still well over breakeven 50 with the future sales component actually rising 1 point to 65. The current sales component, however, is down 3 points to 65 which points to expected slowing for tomorrow's starts & permits data. The traffic component has been holding down this report throughout the whole recovery and continues to do so, down a steep 5 points to 39 and the lowest reading since also May last year.

Details show step backwards for all four regions with the West, a key region for the new home sector, down 5 points to a still standout composite score of 68. The South and Midwest are both at 57 with the Northeast continuing to trail far behind, down 2 points to 45.

Builders are citing scarcity of both labor and available lots as negatives right now. Momentum in the housing sector was bumpy last year and, based on this report, looks to remain so, at least through the early part of this year.

Recent History Of This Indicator:
The housing market index has been losing a little steam but is nevertheless signaling that confidence among the nation's home builders is very strong. The Econoday consensus is calling for a 1 point rise to 61.0 for the February report, a reading that would be well above breakeven 50.0. The component for present sales has been especially strong as have the future sales. But traffic, reflecting lack of first-time buyers, has been lagging.