The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index
(HMI), which hit an 18-year high in December, backed off a bit this month. NAHB said the composite index, a measure of builder
confidence in the market for new homes, was down 2 points from that new peak to
72. All three of the Index components moved down slightly.
“Builders are confident that changes to the
tax code will promote the small business sector and boost broader economic
growth,” said NAHB Chairman Randy Noel. “Our members are excited about the year
ahead, even as they continue to face building material price increases and
shortages of labor and lots.”
Analysts had expected a slight
decline in the index after its five-point surge in December. Those polled by Econoday had a consensus of
73, with a range of 70 to 75.
The HMI is derived from the NAHB’s monthly
survey that asks builders to quantify the current market for single-family home
sales as well as their 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 for 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.
Builder responses regarding the
current market caused that component to retreat by one point to 79. Their
expectations for future sales moved that part of the index down a single point
as well, to 78. The measure of buyer traffic, which consistently lags the others,
fell four points to 54.
“The HMI gauge of future sales
expectations has remained in the 70s, a sign that housing demand should
continue to grow in 2018,” said NAHB Chief Economist Robert Dietz. “As the
overall economy strengthens, owner-occupied household formation increases and
the supply of existing home inventory tightens, we can expect the single-family
housing market to make further gains this year.”
Regional index levels are reported
as three-month moving averages. The
composite score in the West rose two points to 81, the South increased one
point to 73, the Midwest inched up a single point to 70 and Northeast climbed
five points to 59.