Home builder confidence, which has been climbing for five months, hit a plateau in March, failing to post yet another gain, according to data released Monday by the the National Association of Home Builders (NAHB).
Following five months of gains, the NAHB/Well Fargo Housing Market Index, a measure of builder confidence in the market for newly built, single-family homes in the United States, held steady at 28, its highest level since June 2007. The February reading was revised downward to 28 from 29.
An HMI below 50 represents an overall pessimism about the U.S. market for newly built houses. The steadiness of the HMI at 28 in March denotes a slowly strengthening, but still weak, home building market.
While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving, said Barry Rutenberg, chairman of the NAHB.
Regionally, the HMI gained five points to 25 in the Northeast, two points to 32 in the Midwest and two points to 27 in the South, but it dropped precipitously -- by 10 points -- in the West.
Builder confidence is now twice as strong as it was six months ago, and the West was the only region to experience a decline this month following an unusual spike in February, said David Crow, NAHB Chief Economist.
Recovery and further strengthening in the home building market has been stymied by tight builder and buyer credit and the high number of distressed properties on the market.
The last HMI above 50, denoting overall good conditions in the market, was in April 2006, according to MarketWatch.