NAHB Housing Market Index Posts First Drop In 10 Months, First Miss Since April 2012

With the honey badger market continuing to be completely dislocated from absolutely every piece of underlying data (except for German hope and confidence reported earlier this morning), moments ago the NAHB housing market index printed at 46, on expectations of an increase from January's 47 to 48. This makes it the first drop in the index in 10 months, and the first drop to expectations since April 2012, which in turn sent the ES to fresh highs (don't ask). And while we are confident the decline will be blamed on such unpredictable aberrations as snow in January and February, a meteor shower in Russia and, of course, Bush, despite last February's print posting a solid rise from 25 to 28, perhaps the more worrying indicator was that the component gauging traffic of prospective buyers slipped a whopping 4 points to 32. The drop matched the biggest sequential declines going back all the way to 2007. And now back to your pre-spun housing recovery.

The NAHB index visualized:

And the prospective buyer component:


From the report:

Builder confidence in the market for newly built, single-family homes was virtually unchanged in February with a one-point decline to 46 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.


“Following solid gains over the past year, builder confidence has essentially leveled out and held in the same three-point range over the last four months,” noted NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “This is partly due to ongoing uncertainties about job growth and consumer access to mortgage credit, but it’s also a reflection of the fact that builders are now confronting rising costs for building materials and, in some markets, limited availability of labor and lots as demand for new homes strengthens.”


“Having risen strongly in 2012, the HMI hit a slight pause in the beginning of this year as builders adjusted their expectations to reflect the pace at which consumers are moving forward on new-home purchases,” observed NAHB Chief Economist David Crowe. “The index remains near its highest level since May of 2006, and we expect home building to continue on a modest rising trajectory this year.”


Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales 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 from 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.


Holding above the critical mid-point of 50 for a third consecutive month, the HMI component gauging current sales conditions fell by a single point to 51 in February. Meanwhile, the component gauging sales expectations in the next six months rose by one point, to 50, and the component gauging traffic of prospective buyers slipped four points, to 32.


Three-month moving averages for each region’s HMI score were mixed in February, with the Northeast up three points to 39 and the West up four points to 55 and the Midwest and South each down two points, to 48 and 47, respectively.


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