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Today, the National Association of Home Builders (NAHB) released its latest Housing Market Index (HMI). It showed that assessments of housing activity declined slightly in February, with the composite HMI index falling to 46 while the buyer traffic index fell more notably to 32. It's important to note that February showed a flattening of sorts to future expectations, a development that is worth noting as the new-home market moves through it's most active months at the start of the year (see Bob Tolls explanation for January -- early spring being the new-home market's most active period annually).

While all indicators have made truly spectacular improvements this year, it's important to note that conditions still remain fairly distressed by historic standards. However, looking at the data, it is fairly clear that the last few months of results indicate a major change in builder sentiment, likely coming as a result of improvements in confidence given the notable rise in buyer traffic, reduced inventory, and a more balanced monthly supply.

Source: Homebuilder Blues: NAHB/Wells Fargo Homebuilder Ratings, February 2013