Recently released data revealed this week that the recent drop in mortgage interest rates and much-improved employment prospects have not been enough of a fillip to motivate consumers to purchase new homes.
The National Association of Home Builders/Wells Fargo Housing Market Index, which measures confidence among home builders, dropped for a third straight month and reached its lowest level since summer 2014, slipping two points to 53 in March 2015. And while this is the lowest confidence level since July 2014, it is still indicative of optimism among builders, as the score remains above the crucial 50 mark.
Last month, the NAHB had pinned the blame on winter weather – a common culprit in the first few months of a calendar year – for the slip in builder confidence. In March, however, the variables had changed, as builders singled out labor shortages, stringent mortgage lending requirements, and a lack of vacant lot supply, thus depriving builders of chances to build homes on vacant land.
But with construction and home sales ticking upwards, the NAHB is upbeat with regards to prospects for calendar 2015, and expects a resurgence of activity in the spring. “We are expecting solid gains in the housing market this year, buoyed by sustained job growth, low mortgage interest rates, and pent-up demand,” said NAHB chief economist David Crowe in a statement.
The NAHB’s report on builder confidence is far from being the only interesting housing report due to arrive this week. Later on today, the U.S. government will be releasing its housing starts report for February 2015.
According to a recent MarketWatch poll, construction on new homes may drop from an annualized figure of 1.07 million in January to 1.03 million in February. Despite the decline, this is widely considered to be a solid figure, but not a spectacular one. Still, all eyes will be on this report when it is released, as it may or may not prove whether higher employment and lower mortgage rates are really enough to whet consumer appetite for real estate.
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