Confidence among U.S. homebuilders rose less than forecast in March, a sign the industry may take time to pick up after inclement weather damped activity earlier in the year.
The National Association of Home Builders/Wells Fargo index of builder confidence climbed to 47 from 46 in February, a report from the Washington-based group showed today. The median forecast in a Bloomberg survey of 47 economists was 50. Readings below 50 mean more survey respondents reported poor market conditions than good.
This month’s reading follows a drop in February that was the biggest on record amid snowstorms that restrained prospective buyers from going out to shop for homes and kept builders from starting work. Recent gains in borrowing costs and higher property values also are limiting affordability, while an improving job market will help to underpin demand.
“Builders continued to be affected by poor weather and difficulties in finding lots and labor,” NAHB Chairman Kevin Kelly, a homebuilder and developer from Wilmington, Delaware, said in a statement.
Estimates in the Bloomberg survey ranged from 45 to 55. The index, which was first published in January 1985, reached a record low of 8 in January 2009.
Another report today showed factory production rose in February by the most in six months, indicating the industry started to recover from severe winter weather.
The 0.8 percent increase at manufacturers followed a 0.9 percent slump in the prior month that was the biggest since May 2009, figures from the Federal Reserve in Washington showed. The median forecast called for a 0.3 percent gain. Total industrial production rose 0.6 percent, more than projected.
The builders group’s index of present sales of single-family homes increased to 52 this month from 51 in February.
The confidence survey asks builders to characterize current 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.
“A number of factors are raising builder concerns over meeting demand for the spring buying season,” David Crowe, the NAHB’s chief economist, said in a statement. “These include a shortage of buildable lots and skilled workers, rising materials prices and an extremely low inventory of new homes for sale.”
Confidence among builders declined in two of the four U.S. regions, as the Northeast and West dropped 5 points. Sentiment for builders in the Midwest and South improved.
Snowfall and frigid temperatures in the eastern U.S. has hurt everything from housing to retail sales. Home starts slumped in January by the most in almost three years as unusually harsh winter weather added to the industry’s burdens. February figures will be released tomorrow.
Sales of previously owned homes dropped in January to the lowest level in more than a year as poor weather combined with a lack of supply and strict lending rules.
Beyond the weather, borrowing costs for homebuyers have been climbing. The average 30-year, fixed-rate mortgage rate was 4.37 percent in the week ended March 13, up from 3.63 percent a year earlier, according to Freddie Mac in McLean, Virginia.
Hovnanian Enterprises Inc. (HOV), New Jersey’s largest homebuilder, reported a wider loss for its fiscal first quarter as inclement weather extended construction times and sales demand slowed.
“We believe this is a temporary pause in the industry’s recovery,” Chief Executive Officer Ara Hovnanian said in a statement on March 5. “Based on the level of housing starts across the country, we continue to believe the homebuilding industry is still in the early stages of recovery.”
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