Builders remain relatively depressed for the fourth straight month. The NAHB/Wells Fargo Housing Market Index for February continues at 16. The index value can range from zero to 100 with 50 the ‘Goldilocks’ moment of a market that is neither too hot nor too cold. At its extremes, the index value was 72 at the height of the market in Jun 2005 and sank to an all-time low of 8 in January 2009. It rose to a recent high of 22 in May 2010 but has not moved above 16 since then.
The index is made up of three components measuring different aspects of the home building market. The current sales indicator increased two points to 17, which is the highest since June 2010. The expectations for the next six months component rose one point to 25, which was the level in November and December 2010. The index of traffic in sales offices and models remained at 12.
In written comments, builders expressed concern about continued price competition from foreclosures, inaccurate appraisals and lack of credit for buyers as well as for builders. Many expressed concern that the only buyers in the market were looking for additional and significant price discounts beyond what the builders have already made.
There were pockets of optimism across the country as some builders began to get phone calls, see signed contracts and experience some up-tick in serious interest. There did not appear to be any geographic or market-segment concentration of the optimism. Some builders did view the unusual January weather as an added reason for little customer interest and looked to post Super Bowl weekends for improvement.