U.S. Home Builders Index Falls Sharply in February

The Housing Market Index, compiled by the National Association of Home Builders/Wells Fargo, fell 10.6% to 42 (-12.5% y/y) in February from an unrevised 47 in January. It was well below the break-even point of 50, where it’s been since May. The index remains below a July 2023 high of 56 and a November 2020 peak of 90.

The rate on a 30-year fixed rate mortgage averaged 6.88% in the first two weeks of February versus 6.96% during all of January. It remained below the high of 7.79% in the last week of October 2023, according to Freddie Mac.

The single-family sales measure declined 8.0% to 46 (-11.5% y/y) from 50 in January. The prospective sales index in six months fell 22.0% (-23.3% y/y) to 46 from 59 in January. It was the lowest level since December 2023. The traffic of prospective buyers’ index fell 9.4% both m/m and y/y.

Housing performance weakened across the country during February. The Northeast index fell 26.2% (-22.6% y/y) to 48 from 65 in January. It was the lowest level in six months. In the South, the index weakened 10.6% (-16.0% y/y) to 42 in February from 47 in January. The index for the Midwest was off 2.3% (+13.2% y/y) to 43. The index in the West declined 16.7% (-25.5% y/y) to 35 from 42 in January.

The NAHB has compiled the Housing Market Index since 1985. It reflects survey questions which ask builders to rate sales and sales expectations as "good," "fair" or "poor" and traffic as "very high," "average" or "very low." The figures are diffusion indexes with values over 50 indicating a predominance of "good"/"very high" readings. In constructing the composite index, the weights assigned to the individual index components are: 0.5920 for single-family detached sales, present time, 0.1358 for single-family detached sales, next six months, and 0.2722 for traffic of prospective buyers. The regional indexes run back to December 2004.

These data are included in Haver's SURVEYS database.