by Calculated Risk on 3/15/2006 07:59:00 PM

The National Association of Homebuilders reports: Builder Confidence Virtually Unchanged in March


Click on graph for larger image.

A one-point decline in the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for March indicates that housing demand and sales are gradually returning to a sustainable pace that is right in line with our forecasts, said NAHB today.

"Today’s HMI provides the latest evidence of a predicted and orderly cooling process for the nation’s single-family new-home market, which easily hit record highs in 2005," said NAHB President David Pressly, a home builder from Statesville, N.C.

Noting that the confidence gauge has remained within a narrow two-point range for four consecutive months following a retreat from its peak in mid-2005, NAHB Chief Economist David Seiders attributed March’s slight downshift to eroding affordability conditions as well as a gradual withdrawal of investor demand in some areas.

"Rising interest rates and high rates of home-price appreciation have raised the bar for homeownership to beyond what some families can reach," he noted. "Meanwhile, a retreat of short-term investors from certain markets is helping restore equilibrium between supply and demand."

There is plenty of happy talk about restoring "equilibrium", but the last time the market index was lower than March was right after 9/11/2001.