Confidence among homebuilders held in March at a nine-month low as sales prospects waned, a sign the housing market may be struggling to accelerate as the spring-selling season approaches.
The National Association of Home Builders/Wells Fargo builder sentiment index was 58 this month,
While the housing industry has posted steady progress over the past few years, a crimped supply of available of properties — especially for first-time buyers — is limiting further improvement. While borrowing costs remain low, home-price appreciation has outstripped wage growth for more than three years, making it harder for low-income Americans to make a purchase.
"The single-family market continues to make slow but steady progress," said NAHB Chairman Ed Brady, a homebuilder and developer from Bloomington, Ill. "However, builders continue to report problems regarding a shortage of lots and labor."
The median forecast in a Bloomberg survey of 47 economists called for a March reading of 59. Estimates ranged from 57 to 60. The gauge reached a 10-year high of 65 in October.
The group's gauge of buyer traffic climbed to 43 in March from 39 the prior month. The index of current single-family home sales was unchanged at 65.
The measure of the six-month outlook declined to 61, a one-year low, from 64.
Builder confidence improved in two of four U.S. regions, with the biggest gain coming in the South.
"Solid job growth, low mortgage rates and improving mortgage availability will help keep the housing market on a gradual upward trajectory in the coming months," David Crowe, NAHB chief economist, said in a statement.
Labor market growth has helped support the housing industry, with companies adding 223,000 employees per month on average in the year ended February. Still, a consistent acceleration in wage growth remains elusive — wages climbed just 2.2% in February from the year before — putting a lid on how much housing can improve.
Federal Reserve policy makers are monitoring the industry as they gauge the effects of their first tightening cycle since 2006. U.S. central bankers meet Tuesday and Wednesday, and while investors foresee almost no chance of an interest-rate increase, how the Fed telegraphs its next move will be heavily scrutinized.
