US home builder confidence edges lower in Feb amid uncertainty

19 February 2013 17:02  [Source: ICIS news]

WASHINGTON (ICIS)--Market confidence among US home builders edged lower in February, a key survey said on Tuesday, amid uncertainties over the nation’s still-high unemployment rate, tight credit and rising costs for materials and labour.

The National Association of Home Builders (NAHB) said that its housing market index (HMI) fell by a single point this month to a reading of 46.

The HMI is a compilation of three subsidiary measures: home builders’ current sales of single-family homes; the number of prospective home buyers visiting model homes; and contractors’ expectations for home sales over the next six months.

On the 1-100 HMI scale, a reading of 50 or above indicates that home builders are confident about their prospects over the next six months.

During the US housing boom years of 2002-2005, the housing market index had held steady in the mid-60s, and even reached the upper-70s at times.

At the bottom of the US 2008-2009 recession, the HMI hit an all-time low of 8 in January 2009.

After bouncing around in the middle teens for the rest of 2009 and through most of 2011, the HMI measure of builder confidence began an apparent recovery in early 2012.  The index rose into the upper-20s by midyear and then to the mid-40s by year end.

“Following solid gains over the past year, builder confidence has essentially levelled out and held in the same three-point range over the last four months,” said NAHB chairman Rick Judson.

“This is partly due to ongoing uncertainties about job growth and consumer access to mortgage credit,” Judson said.

“But it’s also a reflection of the fact that builders are now confronting rising costs for building materials and, in some markets, limited availability of labour and lots as demand for new homes strengthens,” he added.

Despite the narrow downturn in the February index, NAHB chief economist David Crowe said he was confident the market would improve. “We expect home building to continue on a modest rising trajectory this year,” Crowe said.

The US housing sector is a crucial downstream consuming industry for a wide range of chemicals, resins and derivative products, either as home components or in production of construction supplies.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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