Homebuilder Confidence Down Slightly in January

January 21st, 2015 by Editor

Though still high, builder confidence in the market for newly-built, single-family homes declined one point to 57, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) released today. This marks the third straight month that the index has hovered in the upper 50s range.

“January’s HMI reading is in line with our forecast as we head into the new year,” says NAHB chief economist David Crowe. “Steady economic growth, rising consumer confidence and a growing labor market will help the housing market continue to move forward in 2015.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI component gauging current sales conditions remained unchanged at 62 in January while the index measuring expectations for future sales dropped four points to 60 and the component gauging traffic of prospective buyers fell two points to 44.

Looking at the three-month moving averages for regional HMI scores, the West rose by four points to 66, the Midwest registered a three-point gain to 57 and the Northeast was up two points to 47. The South dropped two points to 58.

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