Hurricanes Harvey and Irma, which ravaged Texas and Florida respectively, are taking at least some of the blame for diminishing builder confidence in the new home market. The National Association of Home Builders (NAHB) said the NAHB/Wells Fargo Housing Market Index (HMI) dropped 3 points this month to 64. The August HMI was also revised down from 68 to 67.
The HMI had made a strong recovery in August, rising 4 points, so some deflation was anticipated. The consensus of analysts surveyed by Econoday was for a 2-point decline to 66. The range of estimates however, from 53 to 68, was both unusually broad and pessimistic.
"The recent hurricanes have intensified
our members' concerns about the availability of labor and the cost of building
materials," said NAHB Chairman Granger MacDonald. "Once the rebuilding process
is underway, I expect builder confidence will return to the high levels we saw
Derived from a monthly survey that NAHB has been conducting for 30 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
All three HMI components posted losses in September. The component gauging current sales conditions fell four points to 70 and the index charting sales expectations in the next six months dropped four points to 74. Meanwhile, the component measuring buyer traffic slipped a single point to 47.
"Despite this month's drop, builder
confidence is still on very firm ground," said NAHB Chief Economist Robert
Dietz. "With ongoing job creation, economic growth and rising consumer
confidence, we should see the housing market continue to recover at a gradual,
steady pace throughout the rest of the year."
Regional results are posted as three-month moving averages. The index for the West increased three points to 77 and the Northeast rose one point to 49. The South dropped a single point to 66 and the Midwest fell three points to 63.