U.S. home builders remain optimistic that the housing market will improve, but their expectations for sales over the next six months have dimmed just as the spring home-selling season gets under way.
The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday held steady at 58 this month.
Readings above 50 indicate more builders view sales conditions as good rather than poor. The index had been in the low 60s for eight months until February.
Builders’ view of current sales conditions held steady, while a measure of traffic by prospective buyers increased. But builders’ outlook for sales over the next six months declined to the lowest level in 12 months.
The latest readings come as the annual spring buying season ramps up. Typically, the season sets the pattern for residential hiring and construction for much of the rest of the year.
Sales of new homes surged 14.5 percent last year to 501,000, marking the strongest year for this segment of the housing market since 2007.
But that momentum didn’t carry over into January, when new-home sales fell 9.2 percent to a seasonally adjusted annual rate of 494,000. That’s well below the historic 52-year average of 655,200. February’s sales figures are due out next week.
This month’s builder index was based on 288 respondents.
Builders’ view of current sales conditions for single-family homes held steady at 65, while their gauge of traffic by prospective buyers rose four points to 43. Builders’ outlook for sales over the next six months fell three points to 61, the lowest level since a reading of 59 in March 2015.
Even so, this month’s index builder sentiment index remains in line with the NAHB’s forecast of a slow-but-steady improvement for the single-family home market this year.
“Solid job growth, low mortgage rates and improving mortgage availability will help keep the housing market on a gradual upward trajectory in the coming months,” said David Crowe, the NAHB’s chief economist.
Though new homes represent only a fraction of the housing market, they have an out sized impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB data.