Optimism on the part of home builders took a big of a hit this month as the headline sentiment index from the National Association of Home Builders (NAHB) came in weaker than expected. While economists were expecting a one point decline from January’s reading of 58, the actual reading came in at 55. This was the lowest reading for the index since October, which also happened to be the last time that we saw this large of a miss relative to expectations. While this month’s report saw a meaningful downtick, the weather is likely to have at least had some impact.
The table to the right breaks down this month’s home builder sentiment report by categories and region. As shown, this month it was Traffic that really dragged the overall index lower. With a decline of 5 points, the index fell to its lowest level since July and saw its largest one month decline since October.
In terms of the regional breakdown, sentiment for home builders in the Northeast actually increased by five points rising to 48. The big area of weakness, however, was in the Midwest where sentiment dropped ten points to 49. The only other month since 2004 where sentiment among home builders in the Midwest saw this large a drop was in February of last year, when sentiment saw the same ten point drop, falling from 59 down to 49. There must be something about February in the Midwest lately.