US Home Builder Confidence Down

US home builder confidence has suffered its largest ever monthly drop between January and February 2014. The National Association of Home Builders (NAHB) housing market index plunged from 56 to 46. This is the first reading since May 2013 that has dropped below the crucial 50 mark. When it is below 50 the majority of home builders think that market conditions are poor rather than favorable.

• current sales conditions fell 11 points from 62 to 51
• expectations for the next 6 months sales fell 6 points from 60 to 54
• prospective buyer traffic fell 9 points from 40 to 31

The NAHB blamed the drop on poor weather conditions. However when we look at the changes by region we find:

• Northeast dropped 8 points from 41 to 33
• Midwest dropped 9 points from 59 to 50
• South dropped 7 points from 53 to 46
• West dropped 14 points from 71 to 57

Since the largest drop was in the West where the weather has been rather good (too dry in fact), we are not buying the poor weather argument.
The weakening trend in demand that is all too clear in Greater Phoenix is reflected in the lower buyer traffic reported by home builders at the national level.

Supplied from the Cromford Report.


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