Homebuilder confidence in the U.S. unexpectedly deteriorated 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 a reading of 46 in February from 47 in January.
The modest drop by the Housing Market Index came as a surprise to economists, who had expected the index to inch up to 48.
NAHB Chief Economist David Crowe, said, "Having risen strongly in 2012, the HMI hit a slight pause in the beginning of this year as builders adjusted their expectations to reflect the pace at which consumers are moving forward on new-home purchases."
"The index remains near its highest level since May of 2006, and we expect home building to continue on a modest rising trajectory this year," he added.
The unexpected drop by the Housing Market Index was partly due to a notable decrease by the component gauging traffic of prospective buyers, which fell to 32 in February from 36 in January. With the drop, the index fell to its lowest level since September.
The component gauging current sales conditions also dipped to 51 in February from 52 in January, while the component gauging sales expectations in the next six months rose to 50 from 49.
The report also showed a sharp drop by the housing market index for the South, which slid to 44 in February from 51 in January. The index for the Midwest was unchanged at 46.
Meanwhile, the housing market index for the Northeast rose to 41 in February from 36 in January, and the index for the West crept up to 60 from 59.
Wednesday morning, the Commerce Department is scheduled to release a separate report on new residential construction in the month of January. Housing starts are expected to drop to an annual rate of 914,000 in January from 954,000 in December.
by RTT Staff Writer
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