Homebuilder confidence in the U.S. has unexpectedly seen a modest improvement in the month of February, the National Association of Home Builders revealed in a report on Wednesday.
The report said the NAHB/Wells Fargo Housing Market Index inched up to 84 in February after falling to 83 in January. Economists had expected the reading to be unchanged from the previous month.
The NAHB said the unexpected uptick in homebuilder confidence came as strong buyer demand helped offset supply chain challenges and a surge in lumber prices.
“Demand conditions remain solid due to demographics, low mortgage rates and the suburban shift to lower cost markets,” said NAHB Chief Economist Robert Dietz.
“But we expect to see some cooling in growth rates for residential construction in 2021 due to cost factors, supply chain issues and regulatory risks,” he added. “Some builders are at capacity and may not be able to expand production due to these headwinds.”
The modest increase by the housing market index came as the gauge charting traffic of prospective buyers rose to 72 in February from 68 in January.
The index gauging current sales conditions held steady at 90, while the component measuring sales expectations in the next six months fell to 80 in February from 83 in January.
On Thursday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of January.
Housing starts expected to decrease by 0.7 percent to an annual rate of 1.658 million, while building permits are expected to slump by 1.5 percent to a rate of 1.678 million.
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