Homebuilder confidence slightly fell again this month, according to February's Housing Market Index. The last three monthly readings mark the highest sentiment levels since December 2017.
The National Association of Home Builders and Wells Fargo, which publish the monthly report, revealed sentiment slipped by one point to 74.
While this is the second consecutive month for the sentiment to fall, December of 2019 saw a sentiment increase of five points to 75, marking the highest reading since June of 1999.
"At a time when demand is on the rise, regulatory constraints along with a shortage of construction workers and a dearth of lots are hindering the production of affordable housing in local communities across the nation," said NAHB Chief Economist Robert Dietz. "And while lower mortgage rates have improved housing affordability in recent months, accelerating price growth due to limited inventory may offset some of that effect."
This month, the index measuring current sales conditions fell to 80 points, while buyer traffic decreased slightly, to 57 and sales expectations over the next six months remained at 79 points.
The three-month moving averages for regional HMI scores show that while the South rose two points to 78, the Northeast rose to 63 points, the Midwest increased to 67 points and the West fell one point to 83.
"Steady job growth, rising wages and low interest rates are fueling demand but builders are still grappling with increasing construction and development costs," said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, New Jersey.
NOTE: The NAHB/Wells Fargo Housing Market Index gauges builder opinions of single-family home sales and expectations, asking for a rating of good, fair or poor. Builders are also asked to rate prospective buyer traffic from very low to very high. The scores are used to calculate a seasonally adjusted index with a rating of 50 or over indicating positive sentiment