Home Builder Sentiment Slips Again in February

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) reported on Wednesday (2-16-22) that builder sentiment in the market for newly built single-family homes edged 1-point lower in February to a reading of 82. This marks the second consecutive month the HMI has slipped 1-point lower.

The NAHB notes that despite these monthly declines, the HMI has posted very solid reading at or above 80-points for the past 5-months. Any reading above 50 indicates that more builders view conditions as good rather than poor and that demand remains strong.

Looking at the three-month moving averages for regional HMI scores, the Northeast increased three points to 76, the West rose one point to 89, the Midwest fell one point to 73. and the South edged one point lower to 86.

In comments prepared for the February HMI, NAHB’s Chief Economist Robert Dietz said, “Residential construction costs are up 21% on a year over year basis, and these higher development costs have hit first-time buyers particularly hard. Higher interest rates in 2022 will further reduce housing affordability even as demand remains solid due to a lack of resale inventory.”