Homebuilder confidence has unexpectedly seen a modest deterioration in the month of February, according to a report released by the National Association of Home Builders on Tuesday.
The report said the NAHB/Wells Fargo Housing Market Index edged down to 36 in February after slipping to 37 in January. Economists had expected the index to inch up to 38.
With the unexpected dip, the housing market index dropped to its lowest level since hitting 32 last September.
“Builders reduced their expectations for future sales as buyers report affordability challenges, which is contributing to declining consumer confidence for the overall economy,” said NAHB Chairman Buddy Hughes.
“While the majority of builders continue to deploy buyer incentives, including price cuts, many prospective buyers remain on the sidelines,” he added. “Although demand for new construction has weakened, remodeling demand has remained solid given a lack of household mobility.”
The slight decrease by the headline index came as the gauge measuring future sales slid to 46 in February from 49 in January.
The gauge charting traffic of prospective buyers also fell to 22 in February from 24 in January, while the index gauging current sales conditions held steady at 41.
The NAHB said the latest HMI survey also revealed that 36 percent of builders cut prices in February, down from 40 percent in January.
This marks the lowest incidence of price-cutting since last May, although the average price reduction remains at 6 percent.
The use of sales incentives was 65 percent in February, unchanged from January and marking the 11th consecutive month this share has exceeded 60 percent, the NAHB said.
On Wednesday, the Commerce Department is scheduled to release reports on new residential construction in the months of November and December.
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