Confidence among U.S. homebuilders unexpectedly fell for a second month in March, a sign the residential real-estate market will take time to strengthen.
The National Association of Home Builders/Wells Fargo index of builder confidence dropped by 2 points to 44 this month, due to a decrease in the measure of current sales, a report from the Washington-based group showed today. The median forecast in a Bloomberg survey called for a gain to 47. Readings below 50 mean more respondents said conditions were poor.
“In addition to tight credit and below-price appraisals, homebuilding is beginning to suffer growth pains as the infrastructure that supports it tries to re-establish itself,” David Crowe, chief economist at the builders association, said in a statement. “The road to a housing recovery will be a bumpy one until these issues are addressed, but in the meantime, builders are much more optimistic today than they were at this time last year.”
The group’s gauges of the sales outlook for the next six months and traffic of prospective buyers improved this month, reflecting stable property values, mortgage rates close to all- time lows and job gains. Limited inventories and resilient sales are benefiting builders including PulteGroup Inc. and Lennar Corp., showing housing will contribute to economic growth this year after emerging as a bright spot in 2012.
The builders’ index compares with a reading of 28 in March 2012. Estimates of the 41 economists in the Bloomberg survey ranged from 46 to 49. The index, first published in January 1985, averaged 54 in the five years leading to the recession that began in December 2007. It reached a record low of 8 in January 2009.
The builders group’s index of present single-family home sales fell to a five-month low of 47 in March from 51. A measure of sales expectations for the next six months climbed to 51 from 50. The gauge of buyer traffic advanced to 35 from 32.
“Although many of our members are reporting increased demand for new homes in their markets, their enthusiasm is being tempered by frustrating bottlenecks in the supply chain for developed lots, along with rising costs for building materials and labor,” Rick Judson, the association’s chairman and a builder from Charlotte, North Carolina, said in a statement.
The confidence survey asks builders to characterize sales as “good,” “fair” or “poor” and to gauge prospective buyers’ traffic. It also asks participants to gauge the outlook for the next six months.