Confidence among home builders dipped in February from the prior month, according to a closely watched survey, as concerns about the economy weighed on builders’ bullishness about the housing sector.
The National Association of Home Builders/Wells Fargo Housing Market Index released Tuesday fell three points to 58 this month. A score on the index above 50 signals builders’ optimism about the new home market. The score in January was revised to 61.
Though the score dipped this month, the figure is still well within positive territory, and a Wells Fargo Securities report Tuesday also expects housing to continue to fare well in 2016.
“Though builders report the dip in confidence this month is partly attributable to the high cost and lack of availability of lots and labor, they are still positive about the housing market,” NAHB Chairman Ed Brady said in the release. “Of note, they expressed optimism that sales will pick up in the coming months.”
The U.S. economy is still adding jobs despite turmoil in the global markets and slowing growth in major economies such as China.
“Builders are reflecting consumers’ concerns about recent negative economic trends,” NAHB Chief Economist David Crowe said in the release. “However, the fundamentals are in place for continued growth of the housing market. Historically low mortgage rates, steady job gains, improved household formations and significant pent up demand all point to a gradual upward trend for housing in the year ahead.”
The home builder sentiment is at its lowest point in nine months, according to Wells Fargo Securities. The prospective buyer index declined 5 points this month.
But the Wells Fargo report still expects an expansion year for housing.
“The present sales component also slipped on the month, although sales expectations improved slightly,” the Wells Fargo report said. “Both of these components now stand at 65, indicating they are firmly in expansion. In sum, although builder sentiment has moderated recently, the index still points to continued gains in the housing sector. We expect housing starts to rise around 8 percent in 2016.”