Builder Confidence Drops 10 Points in February

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CF Funding is surprised to see that the Midwest is still at a score well above 50

Chicago, IL (PRWEB) February 20, 2014

CF Funding is saddened to share that builder confidence has dropped by 10 points to a score of 46, as the NAHB reported today in a press release. The last time CF Funding shared builder sentiment results, the score had dropped by one point on January 16th to a score of 56. Since then, the lender reported a record high builder confidence in the 55+ market on February 3rd. Unfortunately, the score can change quickly and drastically due to a variety of factors. NAHB says this change is due to the severe weather and the “cost and availability of labor and lots.”

Of course, the number of homebuyers shopping around has significantly decreased this winter compared to others due to the harsh storms, as CF Funding had reported last week. But the weather isn’t the only cause of the decrease in builder confidence. According to David Crowe, NAHB Chief Economist, “constraints on the supply chain for building materials, developed lots and skilled workers are making builders worry…The weather also hurt retail and auto sales and this had a contributing effect on demand for new homes.”

The HMI score is based on 3 different components, all of which declined in February. Current sales fell 11 points, but is still above 50 (meaning more builders than not feel confident about current sales). Sales expectations fell 6 points but is also still above 50 at a score of 54. The biggest drop occurred in buyer traffic which dropped 9 points to a score of 31.

The Midwest saw a smaller decline of only 1 point this month, while the West remained unchanged. The South saw a 3 point decrease, and the Northeast saw a 4 point decrease. CF Funding is surprised to see that the Midwest is still at a score well above 50, considering how hard it has been hit by the winter storms. The lowest score the Midwest has seen over the past year was in May of 2013 at a score of 44. CF Funding hopes to see builder confidence improve all across the U.S. as the weather improves this Spring.

As the chart above from the NAHB/Wells Fargo Housing Market Index shows, builder confidence and single-family starts are still below average, in comparison to past scores as far as January 1985. However, both have been steadily increasing as we recover from the crash. CF Funding predicts that builder confidence will soar above 50 again as the year goes on and the housing market continues to improve.

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