The NAHB’s reading on homebuilder confidence was expected to go unchanged at a very strong reading of 86 in January.  Instead, the NAHB’s headline index fell down to a reading of 83. Although that is lower, it remains well above any pre-pandemic reading. In other words, homebuilders are less confident than they have been in the past couple of months but sentiment remains overwhelmingly positive.

Even after falling two months in a row, the overall market index and most of its sub-indices remain near record highs.  As for the regional indices, there is a bit more variation.  The index for the Northeast has seen the sharpest decline falling 10 points in January. That is tied with August of 2018 for the seventh-largest month over month decline on record.  While still in the top decile of historical readings, it is far lower than the other regions. On the other hand, albeit lower, the Midwest and the West are the two regions that remain at the highest ends of their historical ranges.

With earnings season underway, the next month will see the vast majority of the S&P 1500 homebuilder stocks report earnings.  The snapshot below is from our Custom Portolfios tool. This should give more color to the overall picture for homebuilders. As for the companies reporting, only one, MDC Holdings (MDC) has averaged a full day decline in response to earnings.  Additionally, historic beat rates are generally pretty strong across the board. Click here to view Bespoke’s premium membership options for our best research available.

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